We all know that dealmaking is at an unbelievable high, but there's more to this latest flurry than meets the eye. Deals are also beginning to be questioned more by those who stand to gain or lose the most — namely, the shareholders. At least that's the take of Chris Young, vice president of mergers and acquisitions research at advisory firm Institutional Shareholder Services Inc., who gave his thoughts during a Webcast this week. Young said today's shareholders have become more cynical about the role of advisers and are increasingly beginning to take a stand if a deal doesn't make sense. Shareholders are awakening "from their slumber," he said. Case in point: Shareholders in February voted down the proposed leverage buyout of Eddie Bauer Holdings Inc. by Sun Capital Partners Inc. and Golden Gate Capital.
What's more, hedge funds have become especially active in making their feelings known about a deal, and sell-side analysts are going out on limbs to publicly propose alternative deal structures. Young also reported that hostile deal activity is on the rise, such as Roche Holding AG's $3 billion unsolicited takeover bid of Ventena Medical Systems Inc. on June 26. But the biggest trend of the year is the going-private phenomenon, or leveraged buyouts, a move that is personally lucrative for insiders. Bottom line? Activism is here to stay; tender offers are widely expected to come back into favor due to changes in Securities and Exchange Commission regulations; and companies today are vulnerable to unsolicited offers more than ever. —Cheryl Meyer
See Chris Young's Webcast
See Feb. 8 story from TheDeal.com
See June 26 story from TheDeal.com
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