Back to News
Activism

Inside Hudson Executive’s USA Tech Battle

|
Published: December 9th, 2019
The activist fund’s mission statement says it won't launch public proxy fights, but Hudson Executive nevertheless is set for one at the digital payments technology company.

In January, Hudson Executive Capital LP co-founder Doug Braunstein quietly approached USA Technologies Inc. with a proposal to make an investment, with a goal of collaborating and providing resources to help improve the controls and governance at the digital payments technology company.

Some nine months later, however, the firm surprised the activist community by launching its first-ever director fight — raising the question of whether more proxy contests lie ahead.

Led by Braunstein, a former JPMorgan, Chase & Co. CFO, Hudson Executive has run a sort of activist-with-a-lighter-touch investment business since 2015. It has acquired large minority stakes in companies and has worked with them behind the scenes to provide strategic and operational advice. The New York-based fund, which has a roster of current and former high-profile CEOs as partners, has posted a return of about 60% for 2019 so far, according to sources.

A source familiar with the situation said Braunstein made an initial investment in USA Technologies on the expectation that its executives and board would be generally supportive of Hudson Executive’s input on governance and direction. Shares shot up about 40% on the initial disclosure of the stake in May and the expectation that Hudson Executive would help improve the situation. (Hudson now owns 16.2% of equity.)

According to another source, USA Technologies at first was open to listening to Hudson Executive’s ideas, as it is with other prospective investors. The Malvern, Pa., company, however, was not interested in a proposal for a preferred private placement that the activist fund had been hoping to provide, the source added.

Editor’s note: The original version of this article, including advisers and other details, was published earlier on The Deal’s premium subscription website. For access, log in to TheDeal.com or use the form below to request a free trial.

This Content is Only for The Deal Subscribers

The Deal provides actionable, intraday coverage of mergers, acquisitions and all other changes in corporate control to institutional investors, private equity, hedge funds and the firms that serve them.

If you’re already a subscriber, log in to view this article here.

More From Activism

Activism

Activist Investing Today: Privet’s Rosenzweig on Synalloy, Covid-19

By Ronald Orol
|
Published: March 30th, 2020
The partner at the event-driven and value-oriented insurgent fund explains why he is plodding ahead with a change-of-control director contest at a metals and specialty company even though he is 'cognizant' of the coronavirus' effects on the world.
Activism

Activist Investing Today: Coast's Rasteh on FirstGroup, Covid-19

By Ronald Orol
|
Published: March 23rd, 2020
The founder of the New York-based activist fund explains why he's sticking with his investment and campaign at transport and school bus company FirstGroup — one of the fund's largest positions — even as its share price gets battered.
Activism

Activist Investing Today: V&E's Elbaum on Covid-19 vs. 2008

By Ronald Orol
|
Published: March 13th, 2020
The co-head of the shareholder activism practice at Vinson & Elkins explains what the 2008 financial crisis can teach us about how activists might react and perform during the coronavirus outbreak.