In a year marked by unprecedented shareholder activism, Sidley Austin LLP has once again emerged as the leading firm, providing crucial counsel to numerous public companies navigating the challenging landscape. According to recently released data from Bloomberg, Sidley advised on an impressive 48 engagements in 2023, with the total shareholder stakes involved in these matters reaching an astounding $7.3 billion. This achievement follows the firm’s successful lead in 2022, where it also managed 48 activist campaigns.
Unveiling the Rankings
Securing the second spot is Vinson & Elkins LLP, which adeptly handled 42 engagements, overseeing shareholder stakes totaling $3.3 billion. Latham & Watkins LLP secured the third position with 31 engagements, leading shareholder stakes valued at $6.9 billion. Bloomberg’s rankings are based on the number of engagements each firm navigated.
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Activism on the Rise
The year 2023 witnessed a substantial surge in activism, with 823 new campaigns launched—a remarkable 24% increase from the 665 campaigns recorded in 2022. Sidley Austin LLP was pivotal in various high-profile cases, including representing Alkermes in a proxy contest against Sarissa Capital. This particular campaign gained significant attention when Sarissa’s head nominated his romantic partner to fill his position at Biogen Inc. after pursuing director seats at Alkermes. Sidley successfully defended Alkermes against Sarissa Capital’s attempts to secure director seats.
The firm also addressed matters at Nordstrom Inc., where activist investor Ryan Cohen, chairman of GameStop Corp., and founder of Chewy Inc., nominated two board candidates before ultimately withdrawing.
Insights from Sidley Austin
Kai Liekefett, a Sidley partner and co-chair of the firm’s shareholder activism and corporate defense practice, emphasized the enormity of activist activity in recent months. Despite market uncertainty and volatility related to factors such as inflation and supply chain issues, Liekefett anticipates another surge in activism in the coming year. He predicts a “hectic proxy season” as uncertainties begin to subside.
Vinson & Elkins LLP: A Consistent Contender
For the second consecutive year, Vinson & Elkins LLP secured the second position, having previously claimed the top spot in 2021. The firm navigated 42 engagements in 2023, surpassing the 38 engagements recorded in 2022 and 2021. Notable clients included Yelp Inc., Primo Water Corp., and First Foundation Inc.
Noteworthy Engagements
Vinson & Elkins advised Yelp Inc. in addressing activist investor TCS Capital Management LLC’s concerns, pushing the company to consider a sale due to dissatisfaction with its stock price and other issues. Primo Water Corp. sought the firm’s assistance in dealing with activist investor Legion Partners Holdings LLC, resulting in the appointment of two independent directors nominated by Legion to the board.
Lawrence Elbaum, co-head of V&E’s shareholder activism practice, noted an increase in activists seeking board seats in 2023, fueled by limited capital in the markets to buy companies. However, he anticipates a shift towards calls for companies to sell, with capital markets starting to loosen up in 2024.
Latham & Watkins LLP: Making Waves
Latham & Watkins LLP secured the third position in 2023 with 31 engagements, surpassing its fourth spot in 2022. The firm’s involvement in activist campaigns amounted to shareholder stakes of $6.9 billion, second only to Sidley Austin LLP.
High-Profile Cases
Latham assisted IAA Inc. with activist shareholders Ancora Advisors LLC and Discerene Group LP during its merger with Ritchie Bros. Auctioneers Inc. The firm also played a crucial role in 7-Eleven’s parent company, dealing with activist investor ValueAct Capital Management LP’s campaign to overhaul management.
Joshua Dubofsky, a global co-chair of Latham’s shareholder activism and takeover defense practice, foresees more campaigns in 2024. However, he acknowledges the potential impact of a possible recession and the U.S. presidential election later in the year.
Olshan Frome Wolosky LLP: Defenders of Activists
Olshan Frome Wolosky LLP continued its reign as the top firm representing activists in 2023. With 139 engagements covering shareholder stakes valued at $15.6 billion, the firm maintained its leading position. Despite a slight decrease from the 147 engagements in the previous year, Olshan played a crucial role in key activist campaigns.
Challenges in the Proxy Landscape
Meagan Reda, a partner at Olshan focusing on shareholder activism and proxy contests, highlighted the impact of new universal proxy card rules, which substantially increased proxy contest costs in 2023. Despite expectations of cost reduction, the rules, effective since September 2022, led some companies to adopt onerous bylaw amendments, complicating the proxy contest landscape.
Reda emphasized that these amendments will continue to impact the 2024 proxy season and beyond.
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