By Danica Bennewies
Welcome back to the CBLB! The weekend is around the corner, which means its time for another Friday Finds. This is the weekly series where we share five of the top corporate and securities law news stories that dominated the headlines over the past week. This week we have updates on Newmont Mining Corp, Elon Musk, and more. Keep reading to find out which stories grabbed our attention.
First up, we’ve been following the Barrick Gold/Newmont Mining deal for awhile now. To recap, Barrick had originally launched a hostile takeover bid for Newmont in February, but the two mining giants have since decided to enter into a joint venture. This all took place at the same time that Newmont was pursuing a takeover deal for Goldcorp Inc. There’s been some uncertainty regarding whether Newmont would be successful in its US$10-billion bid for Goldcorp, however, it looks like Goldcorp is ready to move forward with the deal. Goldcorp shareholders convened on Thursday to discuss the bid. In a vote taken at the meeting, 97% of shareholders voted in favour of the acquisition. While this is one less roadblock for the success of the deal, approval from Newmont shareholders is still needed. Newmont shareholders will meet next Thursday to vote on the acquisition. However, there’s no guarantee that this vote will be successful, particularly after one of Newmont’s major shareholders announced its opposition to the deal a couple weeks ago. If the deal closes, this will be the second biggest acquisition in the history of the gold sector, falling close behind Barrick’s US$10.4-billion takeover of Placer Dome Inc. back in 2005.
Meanwhile, in the pharmaceutical sector a proxy battle is underway. Montreal-based Knight Therapeutics Inc. has been the target of an ongoing activism campaign by one of its largest shareholders, an Israeli pharmaceutical company called Medison Biotech Ltd. For the past year, Medison CEO Meir Jakobsohn has been calling for the resignation of Knight’s CEO Jonathon Goodman, alleging that Goodman has conflicts of interest and has implemented an unfavourable business strategy for Knight. While the feud began privately, the two companies have since exchanged public allegations as well. The dispute came to a head on Monday, when Medison officially launched a proxy fight for control of Knight, nominating five new members for appointment to Knight’s board of directors. In a statement following the announcement, Jakobsohn said that Knight’s shareholders deserve the “enhanced stewardship and oversight from a board that is willing to take on a more aggressive strategy.” Knight fired back on Thursday, claiming that the proxy battle is based on Medison’s financial issues and self-interested motives. In a news release, Knight alleged that Medison launched the proxy fight in an attempt to gain access to Knight’s $750-million in cash. Clearly, the feud between these two pharmaceutical companies is growing increasingly bitter. Unless they can settle their differences, shareholders will vote on the two slates of board members at Knight’s upcoming annual meeting in May.
Hydro One is going through a major change-up in leadership. Last week the company announced that it’s bringing on the current executive vice president of operations at BC Hydro as its new CEO starting in May. Now, only a week later, Hydro One announced that its chief operating officer and chief legal officer will both be leaving the company. All of this has occurred following Premier Ford’s election last spring. Ford campaigned on a promise to remove Hydro One’s then-CEO, Mayo Schmidt, and the Ontario government has since forced down the salary that the utility can pay its CEO. CEO direct compensation is now capped at $1.5-million, with other executive salaries capped at 75% of the CEO’s total direct compensation. Though no reasons have been given for the two executives departures, it does raise the question of what role the Ford government’s interference in Hydro One’s corporate governance had in this leadership turnover.
In regulatory news, the Mutual Fund Dealers Association of Canada (MFDA) proposed rule changes this week that would allow mutual fund dealers to directly manage clients’ model portfolios without needing client approval. This is a change that dealers have been arguing for, claiming that having this flexibility to engage in limited discretionary trading would allow them to provide more efficient service for clients and be more responsive to changing market conditions. Of course, such a rule change also raises concerns about investor protection. If dealers can make portfolio changes without needing client approval, will they act in their client’s best interests? However, the MFDA believes that this rule change will actually enhance investor protection. This is because all of the regulatory obligations to the client would be on the dealer under the revised rules, rather than shared between a dealer and an external portfolio manager. Thus, the regulator claims that this rule change would avoid potential disputes between the different parties regarding who is liable to the client, enhance client service, and reduce regulatory burden. These changes aren’t coming into effect yet, though – the proposal will be open for comment until August 2nd.
Finally, it’s been awhile since we talked about Tesla and Elon Musk here on the CBLB, so let’s get caught up. On Thursday, a hearing took place regarding the Securities and Exchange Commission’s (SEC) allegations that Musk violated the terms of his fraud settlement. In case you forgot, these allegations were in regard to a tweet containing “material information” that Musk made in February without first getting approval from company lawyers. This pre-approval was a core element of his October 2018 fraud settlement. While Musk faced potentially severe penalties if found in violation of his settlement, including removal as chief executive of Tesla, the judge instead urged the two parties to resolve the dispute amongst themselves. If Musk and the SEC cannot work out their differences in two weeks then the judge said she would rule on whether Musk violated his settlement.
Those were your big stories for this week – thanks for getting caught up with us! Come back to the CBLB next week for another installment of Friday Finds.