Vinson & Elkins LLP helped companies fight more activist shareholder campaigns than its Big Law competitors in 2021, as investors sitting on record amounts of capital ramped up proxy battles.
The Houston-based law firm advised companies on 38 activist campaigns in 2021, with shareholder stakes valued at $4.8 billion, according to new Bloomberg data. Tractor manufacturer
V&E had 11 more engagements in 2021 than the year before as money flowed into activist funds and investors started to come to grips with the Covid-19 pandemic, said Lawrence Elbaum, a V&E partner who helps lead his firm’s shareholder activism practice. The firm faced coronavirus headwinds in 2020 that took time to dissipate with activists unsure how the virus would affect companies, he said.
“They didn’t know what was going to happen through the pandemic,” Elbaum said. “They’re looking through the dashboard saying, ‘Am I going to look like a vulture, if a run a proxy fight against this company?’”
Sidley Austin LLP, which led the rankings in 2020, was a close second in 2021, working on 37 campaigns with shareholder stakes valued at $5.2 billion. The figure represents the values of shares owned by activist investors involved in campaigns.
The firm’s clients included content management software provider Box Inc. and Coupons.com owner Quotient Technology Inc. Sidley also represented Canadian National Railway Co., which is battling a campaign by billionaire Chris Hohn’s TCI Fund Management Ltd. to replace its CEO and several directors.
Like V&E, Sidley had more engagements in 2021 than in 2020. Kai Liekefet, a Sidley partner who helps lead the firm’s shareholder activism practice, said he expects that tally to continue to increase in 2022.
“The activists are sitting on a record amount of capital they’re seeking to deploy,” Liekefet said.
Law firms, overall, defended companies against 590 new shareholder campaigns in 2021, a 3% dip from 607 campaigns in 2020, the data show. But the stakes were 7% higher, with the value of activist shareholder holdings at $74 billion in 2021, compared to $69 billion in 2020.
Velodyne Lidar faced a campaign with activist stakes valued at $2 billion, which was the biggest for V&E in 2021, according to Bloomberg data. Velodyne Lidar founder David Hall and his wife are looking to alter the board’s representation and make management changes.
Hall stepped down as the Velodyne Lidar’s chairman last year over problems he saw with the company’s leadership and direction, raising concerns the company disputed. The company, which makes sensors for self-driving cars, went public in 2020 through a special purpose acquisition company and encountered significant stock volatility.
AGCO engaged V&E to help fight a campaign with an activist stake valued at $1 billion in 2021, Bloomberg data show. Tractors & Farm Equipment Ltd., an investor, is seeking a board overhaul at AGCO.
TAFE has criticized AGCO for a strategy that it said that slowed growth and lowered profitability. AGCO CEO Eric Hansotia has said the company is moving in a different direction.
V&E’s broad experience helping companies in a variety of industries with dozens of shareholder battles over the years is a major draw for clients, Elbaum said.
“When you go through that many campaigns, you don’t need to look up answers,” he said. “You can pivot, you can see around corners like a drone, and you can come up with that strategy on the fly.”
Wachtell, Lipton, Rosen & Katz was in the third spot for number of engagements. Skadden Arps Slate Meagher & Flom LLP, and Latham & Watkins LLP rounded out the top five law firms with the most engagements in 2021.
Latham’s ranking reflects its large stable of public company clients, as well as “incoming referrals for activism-only engagements,” said Christopher Drewry, a corporate partner in Latham’s Chicago office.
The firm helped Kohl’s Corp. navigate a coordinated attempt by multiple investments funds to gain control of the company. Ultimately, Kohl’s was able to reach a deal in April with Ancora Advisors, Legion Partners Asset Management, Macellum Capital Management and 4010 Capital to add two independent directors selected by the activist funds.
Wilson Sonsini Goodrich & Rosati, whose client list is heavy on tech companies, moved up in the top 10 rankings.
Wilson Sonsini teamed up with Sidley Austin to help content management software provider Box Inc. defend itself in a proxy battle against activist investor heavyweight Starboard Value LP.
The hedge fund had sought to replace three directors at the company after expressing disappointment with the company’s management and strategy. The fight was one of the few defeats related to board seats for Starboard, which has notched past proxy wins at Darden Restaurants and GCP Applied Technologies, said Doug Schnell, who leads the firm’s shareholder activism practice from Palo Alto, Calif.
Olshan Frome Wolosky LLP is poised to reap the benefits from the other side of proxy wars.
No other law firm did more work helping shareholders fight companies in 2021. Olshan worked with Elliott Management Corp. and other activists on 119 campaigns with investor stakes valued at $16.3 billion in 2021, according to Bloomberg data. Schulte Roth & Zabel LLP was runner-up with 44 engagements last year.
Olshan is extremely busy this month after Covid-19 gave companies a break from activists, said Elizabeth Gonzalez-Sussman, a partner at the firm.
“I think that things have settled and true performance is showing their colors,” Gonzalez-Sussman said. “So, it makes some issuers a little bit more vulnerable.”