Studies have shown that, taken in the aggregate, mergers and acquisitions destroy more shareholder value than they create, and that this value destruction results primarily from a relatively small number of very bad deals.
The corporate insiders and Wall Street dealmakers who initiate transactions can often profit handsomely even when deals go south, further underscoring the need for investors to scrutinize proposals carefully. Unfortunately, mutual fund advisors and other investment managers may support management recommendations in order to further their own business interests - e.g. selling 401(k) management and other financial services - even if the resulting transactions are not in shareholders' best interest.
Given that public and Taft-Hartley pension funds don't share these conflicts of interest, they are uniquely positioned to monitor management and ensure the benefits of M&A activity accrue to corporations and shareholders. The CtW Investment Group monitors and analyzes major announced deals, and believes that active engagement with directors and executives at these critical junctures can help to prevent, or change the terms of, transactions that would otherwise reduce shareholder value.
Since our founding in 2006, we have successfully spearheaded shareholder engagements with Kellwood Company, CVS/Caremark, Heinz, Inc., Gold Kist, Inc., Lafarge North America, Inc., and Rite Aid, Inc. In each case, we believe engagement by the CtW Investment Group and CtW affiliate-sponsored funds generated improved terms for shareholders, or helped to prevent changes in corporate control and strategy that would have adversely affected shareholder value.