Elliot Management

AT&T’s activist investor liquidates interest in company

17 November 2020 | Melanie Mingas

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Elliot Management, the US-activist investor that took a US$3.2 billion stake in AT&T, has liquidated its investment in the company.

According to regulatory filings made to the United States Securities and Exchange Commission (SEC), Elliott Management sold five million shares during Q3 2020, a year after buying them.

With a recent focus on tech, Elliott Management in 2019 also bought stakes in eBay and SAP and this year targeted Twitter and Softbank. Back in January 2014 the firm set its sights on Juniper Networks when Elliott revealed it owned 6.2% of Juniper’s shares and was demanding management changes.

The firm’s US activism practice is headed by Jesse Cohn, who in September resigned from the board of eBay, however Elliott said its stake in eBay remained unchanged.

The AT&T saga began in 2019 when Elliott Management – which had previously been embroiled in a dispute with Vivendi over the future of Telecom Italia – wrote a letter to the AT&T board.

In the letter, Elliott said: “AT&T has been a disappointing investment for its shareholders relative to nearly any benchmark.”

Elsewhere the letter read: “AT&T can unlock significant value by focusing its asset portfolio, improving operational performance, instituting clear capital priorities, and enhancing leadership and oversight.”

AT&T responded by saying it would “review Elliott Management’s perspectives in the context of the company’s business strategy”, adding: “We look forward to engaging with Elliott. Indeed, many of the actions outlined are ones we are already executing today.”

Elliott Management went on to critique a series of M&A deals, including the $67 billion acquisition of DirecTV in 2014 – it had “damaging results” said Elliott – and the $109 billion purchase of Time Warner.

On that point, the letter read: “Despite nearly 600 days passing between signing and closing (and more than a year passing since), AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner.”

Later that same month, attention turned to AT&T’s CEO and COO and reports at the time from Fox Business said this “would possibly set the stage for a contentious battle in what has been, at least for now, a cooperative relationship between the telecom giant and the activist fund”.

In response, AT&T issued a three-year action plan in October 2019, under which it set out plans to sell $10 billion in assets, shakeup its board, split the roles of chairman and chief executive and implement a plan to replace Randall Stephenson, who retired in April after serving 13 years as AT&T's chairman and CEO.

As of 1 July, Elliot Management had US$41 billion in assets and 161 investment professionals in-house. Last week, AT&T named William E. Kennard the new chairman of its Board of Directors. The firm will host a webcast with John Stephens on 20 November.