Wednesday, March 25, 2009

three brief items

1. Routine votes from brokers

The Securities and Exchange Commission has recently put out for comment a proposed amendment to NYSE rule 452. This rule allows brokers to cast votes on certain routine matters on a client/investor's behalf, if that investor (the beneficial owner) has not provided specific instructions to the broker at least 10 days before a scheduled meeting.

The significance of the practice is that it helps companies meet quorum requirements for those boring issues real people don't care about.

But of course there is lots of room for debate over what should or shouldn't count as a routine issue for this purpose. I hope to have something more to say here along these lines next week.

2. Orthofix resisting Ramius nominees

Ramius LLC and affiliated entities are trying to put three nominees on the board of the orthopedics-product company Orthofix. The nominees are: J. Michael Egan, Peter A. Feld and Charles T. Orsatti. If successful, they will replace current Chairman of the Board James F. Gero, and directors Peter J. Hewett and Walter P. Von Wartburg.

Orthofix is resisting, and the matter will presumably be resolved by or at a special meeting of the company's shareholders on April 2.

Proxy Governance Inc. has issued its own report on this contest, in which it said: "The problem with the dissident campaign is not an inability to evaluate what went wrong, but the profound absense of a plan to effect a credible recovery."

Orthofix is of course ensuring that everybody knows that PGI has said this.

3. CV Therapeutics takeover bid ends

Astellas Pharma, a Japanese company, announced last week the end of its hostile bid for CV Therapeutics. It had made a tender offer of $16 a share.

Astellas was outbid by Gilead Sciences, and Astellas says that it doesn't see value for its shareholders in trying to top Gilead's offer of $20 a share.

My impression is that there is a lot of dry powder out there, especially in the far East. Companies have responded to the crises of the last year and a half by selling assets and holding cash. Now they're tire of cash. Cash is boring. They want to put it to work. We may see a lot of merger and acquisition activity and even some bidding wars coming down the pike, and this one may look like a harbinger.

Gilead and CV are both California-based companies, so this is a neighbor-buys-neighbor story. But not every Far Eastern bidder will withdraw with such quiet grace.

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