IN THE PROXY WORLD…
D.F. King & Co., Inc., - which some industry experts consider to be the biggest U.S. proxy solicitation firm, based on gross revenues - announced in February that it has been acquired by Sage Holdings, along financial public relations firm. Sage, which is headed by Oliver Niedermeier (who not so long ago sold his ‘loyalty marketing firm’ Pepper to Computershare) is backed by The River side Company, a $3 billion private equity firm “that invests in premier middle market companies.” The reported price-tag: a whopping $180 million. “ In contrast to an acquisition by a ‘strategic acquirer’” King’s President & CEO Peter Harkins told the firm’s clients and friends, “which can lead to disruptive headcount reductions, in the name of ‘synergies’ – the success of this partnership will depend, in large part, upon our employees remaining at King.” “No one is leaving” founding-family member Jimmy Long told us. “We’ve kept the whole management team, and we - and all the employee owners of King - have reinvested a percentage of the proceeds back into the business.”
In another big move on the proxy front, Tom Kies – one of the proxy world’s best-known people – has left Computershare’s Georgeson unit to join up with Laurel Hill Capital Par ner s, LLC (and former Georgeson colleague John Sieman, who, as reported in our last issue, had signed up at Laurel Hill a few months ago) to launch a new line of business there, and one that is off to the fastest start of any startup business we’ve ever seen.
How’s this for a ‘starting lineup’ of new proxy solicitation clients, right out of the box: Alliant Energy, Avista, Baker Hughes, ENSTAR, Equifax, Goodrich, Hawaiian Electric, Southern Company, Waste Management, Westar and XCEL Energy.
In addition to Kies, Sieman and one-time D.F. King veteran William W. Catacosinos, a number of other former-leadinglights at Georgeson have joined the Laurel Hill ranks, starting with Glenn Keeling who, to many, was the “Mr. Proxy of Canada”, the British ex-pat and well-known man-about-town David Bobker, who’ll specialize in governance consulting and Employee Plan matters, Tom Cronin, a 30-year proxy-world veteran - and someone who’s literally ‘seen and done it all’, hedge-fund guru and proxy fighter John Einsorde, plus supersalesman David Weeks, from Florida, and Matt Alden from California, both of whom will work from their home bases.
Laurel Hill was founded in 2005 by serial entrepreneur William J. Catacosinos - formerly the Chairman of TNP Enterprises, until its sale in 2005 to PNM Resources and, prior to that, Chairman of the Long Island Lighting Company (LILCO) and, prior to that, the Chairman & CEO of Applied Digital Data Systems…prior to that, a founder and Chairman of Corometrics Medical Systems, and prior to that, Assistant Director of Brookhaven National Laboratory.
The hottest thing the Georgeson ex-pats been selling of late – aside from their own deep experience and hands-on style, that is – is something that the Optimizer has been boosting for many years now; the idea that issuers will really benefit big by tapping their experience all year round - not just during proxy season or in a crisis.
Two other ex-Georgeson people, Bruce Goldfarb and Pat McHugh, have also launched a new proxy solicitation firm – Okapi – following their exit from “G”. The okapi is an African mammal that has the face of a giraffe and the body of a zebra, Goldfarb explains; “Two things you know well, combined in a new way.” As to clients, “We have clients already on board” Goldfarb told us when he called back from the annual M&A Conference at Tulane University, “but, because a lot of our strategy is to work closely with law firms and P-R experts, and to focus on proxy fights, M&A transactions and unique situations that involve a lot of consulting and ‘strategic advice’ – and that often don’t even become public - we don’t want to name any just now.” As he also told us, Steve Balet, who had headed up MacKenzie Partner’s London office, has joined the Okapi team in the U.S.
But don’t cry for “G”, Argentina…Georgeson announced in January that Rachel Posner - formerly an advisor on proxy contests and M&A matters with Fried, Frank, Shriver & Jacobson – had joined them as Senior Managing Director and General Counsel, Corporate Proxy. Also, Rajeev Kumar – formerly the Director of U.S. Research at Risk Metrics’ ISS unit – has joined the firm as Senior Managing Director, Corporate Governance. And in February, Georgeson was ranked number-one in Corporate Control Alert’s survey of the 2007 M&A transactions valued at $100 million or more. Georgeson was the proxy solicitor for over 30% of the M&A transactions – 103 of the deals tracked – which represented a whopping 45% more solicitations than the second-ranked firm. And Georgeson sure caught our eye when it “hit the trifecta” with three big tombstones on Dec. 21st – the only three that day – with three different Dealer Managers – Goldman Sachs, JPMorgan and Merrill Lynch - super-powers all in the M&A world.
And readers, please remember that you read it here first: MORE mergers, acquisitions – and a few new entrants to come too on the proxy front, we guarantee.
MIGHTY BIG DOINGS IN THE TRANSFER AGENT WORLD TOO…
The owner s of the number-three U.S. Transfer Agent, Brooklyn’s AST, have sold a controlling interest to a totally new entrant here, Pacific Equity Partners, an Australian private equity firm that owns a fascinating assortment of movie theatres and bookstores, booze, cookie, vacuum cleaner and poultry producers and distributors, a smoke detector and alarm systems maker, a renter of earth-moving equipment - and owns and/or operates over 400 fast-food outlets like Sizzler , Pat & Oscar s in California and KFC outlets in Australia. More to the point for T-A watchers, PEP owns Computershare’s number-one share-registry competitor in Australia (Link Market Services) and is the owner of AAS, which provides “superannuation administration” (read ‘Employee Plan’ and ‘Retirement Plan’ services) to over 220,000 Australian companies with over 4 million ‘members’ they say, and where the two businesses were recently combined. And, in a development that also surprised us to some degree, AST’s co-owners, the Karfunkel family, seem to be more engaged in the business than ever. AST - which has roughly 2,800 mostly small-cap clients - with 7 ó million or so shareholders in total - has been undergoing a rather amazing transformation since its acquisition of Wachovia Bank’s Transfer Agency business in early 2006. And suddenly, it is making major headway in the large-company world. So far this year it’s added names like CNA, Equifax, Sempra Energy and State Street Bank to its roster - plus all of Deutsche Bank’s fast-growing ADR servicing business. (No big surprise here, following the merger of ADR servicing giant - and big D-B competitor in this space – Bank of New York, with D-B’s former provider, and former non-competitor Mellon.)
But reader s; watch this space for more big news to come. We hear that AST has lined up several more MAJOR NAMES from the “big-two” agents that will astonish T-A watchers. And, just before we went to press, Microsoft announced that it was moving its T-A business to AST…and, concurrently, AST told us, they have hired the very-well-thought of industry veteran Dee Henderson(who, until a year or so ago, had headed-up Mellon’s West Coast TA group) to open and staff up an AST office in Seattle.
Our predictions that a non-U.S. player would make a big move here were r ight on the money…But in yet another surpr ise to us, the U.K.’s Lloyds Registry – which had been shopping on and off for a U.S. acquisition, and which says it has 24 million U.K. shareholders on its records – put itself up for sale instead, with an eye popping asking price of roughly $1 billion U.S.. AST, Computershare and Australia’s LINKS were all rumored to be among the bidders, but the acquirer turned out to be ADVENT, which describes itself as “the leading global private equity group” which - as we’d also predicted here - is a newcomer to the business.
Who would have thought that the ever-shrinking shareholder recordkeeping businesses would ever be so sought after? And do we think the dancin’s done? Not in the least.
And sadly, on the T-A consolidation front, National City – which is one of the few remaining Bank-managed transfer agents, and one of the best agents there is in terms of overall customer satisfaction – seems almost certain to disappear from the scene, thanks to its untimely forays into Florida, and the mortgage banking business in general. The leading acquisition candidates, KeyCorpand Fifth-Third, both exited the T-A biz way back when, and potential bidders that are still in the T-A biz – BNY-Mellon and WFB – seem unlikely buyers (of the Bank, that is) as we write. One way or the other, however, the National City T-A business seems sure to change hands before long, and surprisingly, there’s suddenly a longer list of bidders for that business than ever before. Let’s hope and pray the new owners will maintain the high quality people – and the high quality service levels that National City’s T-A unit has become justly famous for.
ELSEWHERE ON THE SUPPLIER FRONT…
Ipreo – yet another private equity owned player, that’s behind Bigdough – is acquiring CapitalBridge(formerly known as Citigate Financial Intelligence and before that as Citigate Dewe Rogerson) for $31.5 million…to make it a “strong number two” to Thomson Financial’s “market intelligence” unit – or maybe even the number-one.
Thomson Financial finally won clearance from U.S. and E.U. regulators to take over Reuters Group, as long as they act to divest themselves of some financial information products and the related assets, staff and customer bases. More to come here soon…
Lawyer Links LLC, which has “an Internet service for legal practitioners that uniquely organizes content into topic pages designed by the company’s team of legal editors”, has formed a “strategic marketing relationship” with none other than the Society of Corporate Secretaries and Governance Professionals. Info is “organized the way corporate secretaries and governance professionals work, so searches are comprehensive, 100% relevant and fast” their press release – and our own experience with the service tells us.
Layoffs and firings on the legal front are rocking a lot of big law firms these days - not to mention their clients too, we’d imagine: In November, Clifford Chance fired six associates in its structured finance group. In January, Cadwalader, Wickersham & Taft fired 35 lawyers, due to a slowdown in its finance and capital markets groups, while Thatcher Proffitt & Wood laid off 25 associates in its real estate and structured finance groups. And in March, Chicago-based Jenner & Block stripped 10 partners of their equity status and S-F/NY-based Thelen Reid Brown Raysman & Steiner dismissed 26 associates and 85 staff, according to a 3/21 Wall Street Journal article.
There’s no doubt that recent credit crises and the weakening economy are major contributors here, but we also sense that public companies are paying a lot more attention to their legal bills – scrutinizing them with a lot more care, cracking down on their mega-billers, internalizing a lot more work, whenever they possibly can – and “bidding out” a lot more work too, which reminds us to remind you: Have another look at the article on our website on putting one’s legal work out for bid: One of the best and most useful articles we’ve ever published, we think, and particularly useful in these tougher economic times.
And meanwhile, let’s not for get that some law firms racked up record breaking profits in 2007: Latham & Watkins, for example, became the first US law firm to break what the WSJ called the $2 billion “revenue barrier”, and speculated that Skadden, Arps, which last year beat out Latham very handily as the number-one fee generator, did even better than L&W in 2007. And let’s not forget that many law firms have seen their financial restructuring and bankruptcy practices grow like crazy over recent months.
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