Mergers & Acquisitions 2022 Annual Review

2022 M&A ANNUAL REVIEW ■ The dynamics of, and relative leverage in, settlement negotiations could be affected. Many companies are amending their bylaws to build in the new rule’s requirements. Some are also reevaluating, and potentially revising, their advance notice bylaws, though activist investors, proxy advisory firms, and/or shareholders may challenge bylaws that they believe are too aggressive. For example, an activist investor recently challenged Masimo’s advance notice bylaws, which require a dissident shareholder to identify (among other things) the names of the activist’s passive limited partners and their families’ investment holdings in the company’s competitors or litigation counterparties, any plans the dissident has to nominate directors to other public company boards in the next 12 months, and the names of any shareholders who have already expressed any support for the dissident’s nominations. Pending Disclosure Changes Could Impact Activism In 2022, the SEC proposed amendments to beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 to accelerate the filing deadlines for Schedules 13D and 13G reports, expand the application of Regulation 13D-G to certain derivative securities, and clarify the circumstances under which persons have formed a “group” that is subject to the reporting obligations. While corporations desire some changes to limit what they feel are surprise accumulations of shares, many activists oppose the changes as potentially diminishing their upside opportunity. The amendments are pending and are expected to be considered this fall. In 2020, the SEC proposed to amend Form 13F to raise the reporting threshold for investment managers from the current $100 million to $3.5 billion, which it estimated would eliminate filings for 90% of current filers. Because companies often learn about an activist through Form 13F filings, the proposed amendment would eliminate a valuable early warning system. The proposed amendments were not mentioned in the SEC’s Fall 2022 Regulatory Flexibility Agenda, signaling that the amendments are not a current priority. The FTC has proposed to exempt acquisitions from reporting under the HSR Act where the acquirer would not own more than 10% of the company’s stock, regardless of value, and does not have a competitively significant relationship with the company. The proposal would effectively eliminate the $101 million HSR filing threshold that serves as an early warning system for mid-and large-cap issuers. A final rule is expected to be posted in the Federal Register by this June. With shareholders able to “mix- and-match” nominees from competing slates, dissidents may be more likely to win minority representation. Read more about activism including the following recent client alert on Preparing for the Mandatory Universal Proxy Card and Its Potential Impacts on Shareholder Activism and Proxy Contests.