Study pinpoints U.S. companies susceptible to takeovers
Corporate raiders take note: new research finds that financial services company Morgan Stanley and retailer J C Penney Co Inc are among the most vulnerable to hostile takeovers.
The two rank among the top 10 U.S. corporations where control is concentrated within a small group of large shareholders, putting the companies at greater risk of losing a potential hostile takeover bid, according to a report released on Wednesday.
Rotary Gallop, a Houston-based research and consulting firm, measured controlling influence rather than ownership stakes at 495 of the companies in the Standard & Poor's 500 index.
Morgan Stanley and J C Penney were not immediately available for comment.
"What matters is how much control shareholders have in a company, not ownership - the traditional yardstick in contested situations," said Travis Dirks, a trained physicist who is now Rotary Gallop's chief executive.
"Until now it was more of a gut feeling," he said, referring to the traditional method used by pundits of handicapping proxy contest outcomes.
Companies with a high "RG Whale Score" would be in danger of losing in a hostile bid because outsiders would have fewer owners to convince to vote with them and accept a deal, he said.
Separately, "RG Shark Scores" show a company's potential vulnerability to activists winning a proxy contest over corporate governance or other matters. The report lists Wisconsin Energy Corp and Fifth Third Bancorp as vulnerable to "sharks."
While Rotary Gallop assigned the vulnerability scores, it emphasizes that these ratings do not measure the chances that a company will be targeted for corporate actions.
The report also found that Walmart Stores Inc Apple Inc and General Electric Co were among the least vulnerable to corporate actions.
Rotary Gallop started analyzing ownership data in December and released the report as proxy voting season is in full swing with shareholders casting their ballots on issues including executive pay.
J C Penney, for example, was targeted by an activist investor in 2010 when hedge fund manager William Ackman bought up an 18 percent share of the company and won a board seat in 2011. Penney has been in the news this week after the retailer ousted its CEO and brought back its former chief.
(Reporting by Svea Herbst-Bayliss in Boston; editing by Matthew Lewis)