– A federal judge in Texas has ruled a state law targeting ESG investment practices unconstitutional, marking a significant setback for state efforts to regulate corporate sustainability policies. The law, passed in 2021 as Senate Bill 13, restricted the state’s ability to invest in, or contract with companies that it said were boycotting the fossil fuel industry, effectively pressuring financial firms to avoid certain ESG-related criteria.
As reported by Reuters (paywall) on February 5, US District Judge Alan Albright ruled the statute violated the First Amendment, calling it ‘facially overbroad and unconstitutionally vague.’ The decision highlights that the law could punish firms for engaging in protected speech or activities, including support for ESG goals, by tying state contracts and investments to compliance with viewpoint-based criteria.
The American Sustainable Business Council, which challenged the law, hailed the ruling as a win for free speech and competitive investment decisions. State officials, including the Texas comptroller, have hinted at plans to appeal the decision.
– Activist investor Ancora Holdings has stepped into the contentious takeover fight over Warner Bros Discovery, urging the entertainment company to abandon its planned $83 bn sale of studios and streaming assets to Netflix in favor of a rival bid from Paramount Skydance.
Paramount has upped its takeover bid for Warner by maintaining its $30-a-share offer (giving the company an enterprise value of approximately $108 bn) and adding a quarterly ‘ticking fee’ of 25 cents per share, roughly $650 mn per quarter, to compensate shareholders if the deal isn’t closed by the end of 2026.
According to The Wall Street Journal (paywall), Ancora – which holds roughly $200 mn of Warner stock – argues the Netflix deal undervalues the company and carries regulatory uncertainty, and has threatened to vote against the transaction or mount a proxy contest if the board does not seriously engage with Paramount’s offer.
Meanwhile, The Financial Times (paywall) reports that Paramount is lining up support from key shareholders, including potential board nominee Matt Halbower of Pentwater Capital, as part of a broader campaign to challenge the current leadership and push Warner’s board to reconsider its strategy.
Complicating matters further, the US government has launched an antitrust review of Netflix’s acquisition plan, underscoring regulatory risks that could affect the deal’s approval and influence shareholder sentiment ahead of a crucial vote later this year.
– The US Court of Appeals for the Fourth Circuit has overturned a preliminary injunction that blocked the enforcement of key provisions of two executive orders aimed at dismantling DEI initiatives, ruling that opponents must wait to challenge how the orders are applied in specific cases rather than striking them down as a whole.
According to Reuters, the lawsuit was brought by the City of Baltimore and academic groups, who argued the bans violated the First Amendment’s free speech protections and the Fifth Amendment’s due process guarantees. The appeals panel, however, said the executive orders cannot be attacked on face value and left open the possibility of future legal challenges tied to specific implementations.
The White House welcomed the decision as a ‘big win,’ while critics warned it could slow equity-focused programs and pledged to continue litigation in district court.
– Activist investor Elliott Investment Management has acquired a significant stake in the London Stock Exchange Group (LSEG). The move comes as LSEG has struggled with a sharp drop in its share price and investor concerns around competition from AI-driven rivals in data services.
According to The Wall Street Journal, Elliott has been engaging with LSEG’s leadership, urging strategic measures such as fresh share buybacks, narrowing profit-margin gaps with peers and improved performance execution, while signaling it does not favor a full sale or spin-off of the core exchange business.
LSEG’s shares rose modestly on the news as markets priced in the potential impact of Elliott’s involvement.
– Activist investment firm Independent Franchise Partners has disclosed a 3.01 percent stake in Universal Music Group, making it the company’s sixth-largest shareholder, according to a filing with the Dutch financial regulator.
As reported by Reuters, the London-based investor focuses on companies with ‘high-quality franchises’ and substantial intangible assets that it believes offer durable competitive advantages. The latest filing shows the stake was held as of February 9, positioning Independent Franchise Partners alongside major holders such as Vivendi and the Bolloré family, which together control more than 30 percent of Universal Music’s voting rights.
Independent Franchise also holds significant positions in Vivendi and British property firm Rightmove, underscoring its broader activist investment strategy.
– Activist hedge fund HoldCo Asset Management has withdrawn planned proxy fights at KeyCorp and Eastern Bancshares after both regional banks agreed to key governance and strategic changes that aligned with the investor’s demands.
According to Reuters, HoldCo has been pressing both lenders over capital allocation, acquisitions and board composition, part of campaigns at multiple US regional banks this year.
At KeyCorp, HoldCo urged the board to halt acquisitions, boost shareholder returns through stock buybacks and refresh leadership. In response, KeyCorp pledged a $300 mn stock buyback, confirmed it would not pursue further acquisitions and appointed a new lead independent director, leading HoldCo to withdraw its challenge and endorse CEO Chris Gorman.
Eastern responded to similar pressure by committing publicly to forgo future acquisitions, focusing on organic growth and returning capital, and targeting a stronger capital ratio.