August 26, 2021 | Editor: Martin Wennerstrom
Kansas City Southern delays vote on takeover
Kansas City Southern (“KCS”) has delayed the shareholder vote on its takeover by Canadian National Railway (“CN”) pending the US rail regulator’s verdict on the deal. The transaction is facing scrutiny over CN’s plan to set up a voting trust that would acquire KCS and own it while the deal undergoes regulatory review. Within this trust, KCS would continue to be led by its existing management and board of directors, “[preserving] its ability to pursue its independent business objectives.” KCS shareholders would receive the merger consideration upon the closing of CN’s voting trust. The first motion to approve the trust was rejected by regulators, with a renewed request having been submitted on May 26, 2021. On August 10, 2021, Canadian Pacific Railway Limited (“CP”) made a new offer for KCS, reentering the bidding war. Notably, KCS had previously agreed to a CP offer in March 2021 but later accepted CN’s proposal, agreeing to pay CP USD 700 million in termination fees. Regulators are expected to rule on the proposed trust by August 31, 2021, with KCS shareholders to vote on the transaction on September 3, 2021.
SEC (1) | SEC (2) | | SEC (3) | SEC (4) | Railway Age | Reuters | Bloomberg | STB
Germany to reduce stake in Lufthansa
On August 16, 2021, the German government announced that it will sell up to a quarter of its 20% stake in Lufthansa over the coming weeks, citing the initial success of the firm’s recovery plan. The development occurs more than one year after the government offered the airline a EUR 9 billion bailout to maintain its solvency and mitigate the impact of the COVID-19 pandemic. Under the terms of the bailout, far-reaching executive remuneration restrictions were adopted, and two German Government representatives were appointed to the supervisory board. The German government plans to sell the remainder of its stake by year-end 2023.
Credit Suisse to appoint new directors
Credit Suisse has announced an October 1, 2021, EGM to elect two new non-executive directors with “deep experience in risk management.” The move marks the Swiss lender’s latest effort to “enhance [its] culture of risk management and … accountability” as it grapples with the damage caused by the collapse of US hedge fund Archegos Capital Management and British supply chain finance company Greensill Capital. The bank recently released a report summarizing the findings of a three-month external investigation into Archegos. The probe commissioned by Credit Suisse had found “a fundamental failure of management and controls in [its] Investment Bank,” which prompted sweeping changes.CS (1) | CS (2) | Reuters | Bloomberg
WM Morrison takeover saga extended
On August 19, 2021, the board of Wm Morrison Supermarkets PLC unanimously approved a GBP 7 billion takeover offer from US private equity group Clayton, Dubilier & Rice (“CDR”) and recommended that shareholders approve the deal at an EGM to be held around October 4, 2021. Morrison had previously backed a GBP 6.3 billion offer from a consortium led by Fortress Investment Group, which was to be voted on by shareholders on August 27, 2021. Fortress is now urging Morrison shareholders to take no action on the CDR proposal, prompting speculation that the bidding war is set to continue. The development occurs against a backdrop of a recent spike in bid offers by foreign investors for publicly listed UK firms.
Morrisons | Reuters (1) | Reuters (2) | Times
Governance in Brief – March 23, 2023
SVB Financial Group sued after the collapse of Silicon Valley bank unit SVB Financial Group, the parent company of Silicon Valley Bank, and two of its top executives, CEO Greg Becker and CFO Daniel Beck, are being sued by shareholders following the bank’s collapse. The lawsuit, filed by retail shareholder Chandra Vanipenta on behalf of a group of shareholders, accuses the bank and its two top executives of filing false and misleading financial reports.
Governance in Brief – March 16, 2023
Canada introduces climate reporting framework Canadian regulators have issued new guidance for the country's banks and insurance companies to better manage climate-related risks. The framework, which requires disclosure on governance, strategy, risk management, and metrics related to financial institutions’ greenhouse-gas emissions, was first drafted in 2022.
Governance in Brief – March 9, 2023
The U.S. Congress has passed a resolution repealing a Department of Labor (“DOL”) rule empowering retirement plan managers to consider climate change and ESG factors in their investment decisions. The rule, introduced by the Biden administration, falls under the Employee Retirement Income Security Act (“ERISA”), a federal law which sets protection standards for participants in private pension plans. Biden’s ruling entered into force in January this year, overturning prior Trump-era DOL rules that limited pension fund managers to restrict their investment strategies to “pecuniary factors.”
Governance in Brief – March 2, 2023
Indian regulator proposes enhancement to ESG disclosure rules India’s securities and market regulator SEBI has released a new ESG disclosure framework for public consultation. The proposed regulations impact India’s 1,000 largest companies by market capitalization, ESG funds and ESG ratings providers. For the largest companies, the regulator proposes areas of assurance of ESG disclosures and reporting and assurance of ESG footprint of the supply chain. The proposals expand on the 2021 Business Responsibility and Sustainability Report (“BRSR”) guidelines and propose mandatory assurance of certain KPIs under ESG disclosure. The KPIs contain intensity ratios such as GHG emissions, water consumption, and waste generation. For supply chain, SEBI will introduce a comply-or-explain approach for the top 250 companies starting in 2024, and assurance beginning in 2025. For ESG funds, SEBI proposes that at least 65% of AUM be invested in companies reporting on comprehensive BRSR and provide assurance on BRSR core disclosures. Under the proposed rules, ESG rating providers should also provide a “core ESG rating” based on assured information in addition to their own products.