September 23, 2021 | Editor: Martin Wennerstrom
Philip Morris secures control of Vecture, prompting backlash
Philip Morris International Inc (“PMI”) has secured nearly 78% of UK inhaler maker Vectura’s shares through a public tender offer. The tobacco giant has initiated the procedure of delisting Vectura, extended the acceptance deadline from Sep. 15 to Sep. 30, and has indicated that it will squeeze out remaining shareholders if it meets the 90% acceptance threshold. These developments mark a milestone in PMI’s pursuit of Vectura, which involved a bidding war with U.S. private equity firm The Carlyle Group and backlash from health groups. Now, 35 health charities, health experts and doctors have sent an open letter urging the UK Government to block the deal. The letter warns that the takeover would create “perverse incentives” for PMI, since the firm would stand to profit from treating smoking-related conditions. PMI however maintains that the acquisition of Vectura is part of its “Beyond Nicotine” strategy, whereby it aims to derive at least USD 1 billion in net revenues from non-nicotine products by 2025.
Embattled China Evergrande reveals executive misconduct
Debt-ridden property giant China Evergrande has announced that six of its executives have illegally sold their holdings in the company over the past four months and face “severe punishment.” The company, once China’s second-largest property developer, recently posted liabilities of USD 304 billion. The firm’s precarity and systemic importance have led the Hang Seng Properties index to fall to a five-year low, in turn contributing to the recent slump in the S&P 500. There are concerns that the firm’s looming default will prompt the Chinese government to intervene, for example through a bailout.
Top Glove reapplies for Hong Kong IPO
Malaysia's Top Glove has reapplied to list on the Hong Kong exchange (“HKSE”), following the derailment of a previous attempt by a U.S. import ban on the firm’s products. The ban, which ran from July 2020 to Sep. 2021, was based on the firm’s alleged use of forced labor, including “debt bondage, excessive overtime, abusive working and living conditions, and retention of identity documents.” U.S. authorities ultimately concluded that the firm had addressed these concerns, inter alia through the payment of USD 30 million in remediation fees to its workers. The firm announced in April 2021 that the HKSE offer size would be cut by half to minimize dilution of existing shareholders.
Ex-Mylan executive pleads guilty to insider trading
Former Mylan Vice President Dayakar Mallu has admitted that, between 2017 and 2019, he conspired with the company CIO and others to trade company shares in advance of corporate announcements concerning drug approvals, financial earnings, and a merger. The scheme generated USD 4.27 million in illicit profits shared between Mallu and the CIO. Mylan’s CIO at the time of Mallu’s trading currently serves as CIO at Viatris, the company that resulted from the November 2020 merger between Mylan and Pfizer’s Upjohn division. Mallu faces up to 25 years in prison for conspiracy to commit securities fraud.
Governance in Brief – December 1, 2022
Intel changes performance metrics for CEO’s new-hire award Intel has amended the new hire agreement for CEO Pat Gelsinger by increasing the share price growth target from 30% to 50%, extending the post-grant vesting period from three to five years, and increasing the number of trading days during which target prices need to be maintained from 30 to 90 days. The decision comes after more than half of votes cast by shareholders at the 2022 AGM opposed the company’s remuneration report.
Governance in Brief – November 24, 2022
Costco to set new emissions targets following activist demands Activist investment firm Green Century Capital Management claims that Costco Wholesale Corp has pledged to set new Scope 3 climate reduction targets in 2023. At Costco’s January 2022 AGM, 70% of votes supported a proposal from Green Century for the company to include emissions from producers and distributors in its net-zero greenhouse gas emissions targets.
Governance in Brief – November 17, 2022
Renault to potentially spin off EV line and partner with Geely French carmaker Renault Group has announced plans to split its activities into five separate businesses: “Ampere” (electrical vehicles), “Power” (combustion- and hybrid-engine assets), “Alpine” (sports cars), “Mobilize” (financial services), and “The Future is Neutral” (recycling activities). The company is considering listing Ampere on Euronext Paris in 2023 and has said that it will welcome external investors while maintaining a “strong majority.”
Governance in Brief – November 10, 2022
Petrobras to pay massive third quarter dividend Petrobras has approved the payment of around BRL 43.68 billion (USD 8.4 billion) in Q3 dividends. Of the total dividend, around BRL 20 billion (USD 3.9 billion) will go to the Brazilian federal government, Petrobras’ controlling shareholder.