Activism, Wolf Packs, and SCG

This chapter explores shareholder activism carried out by “wolf packs.” Just as a blockholder with a sizable percentage of the corporation’s equity can significantly influence a firm’s governance, a wolf pack is a group of investors that attacks a target corporation in tandem under the leadership of a single, sophisticated activist, collectively acquiring enough equity to form a de facto block. The chapter then looks at the formation of wolf packs and conflicting theories that attempt to explain their behavior. It also focuses on their ability to acquire considerable power in a corporation, considering the challenges that presents to legal regimes, particularly in proxy contests and other change-of-control transactions. Changes of control, especially in cases of hostile takeovers, are controversial because they often necessitate a consideration of strategic objectives different from those of the target company’s board prior to the takeover.