Lipton sees changes in hedge activism

By Dane Hamilton

NEW YORK (Reuters) - Martin Lipton, the famed corporate lawyer who for years advised companies to fight activist hedge funds, now says some companies could do well to listen to some of these dissident shareholders.

Lipton, credited with inventing the "poison pill" anti-takeover defense, told the Reuters Investment Banking Summit in New York that "there has been a very significant change in attitude by target companies."

"Companies today are much more inclined to undertake strategic revisions ranging from management to strategic changes," said Lipton. "I think it's a good thing."

Still, Lipton on the whole indicated he hasn't completely embraced the latest wave of corporate raiders.

Lipton's comments come amid changes in how many campaigns were undertaken by activist hedge funds, which typically buy a stake in a target company and agitate for measures to boost shareholder value, such as buybacks or asset sales.

Previously, activists like billionaire investor Carl Icahn would launch scathing public campaigns to pressure companies to change course. But while the Icahn approach worked in energy company Kerr-McGee, it fell short at a campaign at Time Warner Inc. (TWX.N: Quote, Profile, Research, Stock Buzz).

Some funds, like Pershing Square Capital Management, are taking a more conciliatory approach by engaging corporate managements, offering alternative plans and proposals.

Lipton, a partner in Wachtell, Lipton, Rosen & Katz, said the new approach is winning converts in a corporate world where hedge funds have become significant shareholders in recent years.  Continued...