DOJ Suit Against ValueAct Shines Spotlight on HSR Requirements for Shareholder Activists

Suit signals potential consequences for activist investors who rely on the HSR “solely for purposes of investment” exemption.

On April 4, 2016, the U.S. Department of Justice (DOJ) sued certain ValueAct Capital entities for alleged violations of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). DOJ alleges that ValueAct failed to report its purchases of a total of over US$2.5 billion in Halliburton and Baker Hughes voting securities. DOJ contends that ValueAct could not avail itself of the “solely for purposes of investment” exemption to HSR because ValueAct intended to influence the parties to pursue their US$35 billion merger and to participate in the parties’ strategic decision making.

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