Nothing beats a contested election, especially if the battle is between a storied American company like Procter & Gamble and one of Wall Street’s most feared hedge fund activists, Nelson Peltz of Trian.

What happened? P&G used an old-fashioned electoral technique to claim victory in the most expensive proxy battle in corporate America despite the vote being effectively too close to call.

Peltz immediately rejected the claim and went on CNBC, arguing that the vote was “as close to a dead heat as possible . . . if anything, it’s plus or minus 1 per cent.” Later, in a press release, he added that the vote was “too close to call and will take more time to determine the outcome”. 

What was Trian fighting for? As usual it was all about having a seat at the table. Trian, which holds roughly 1.5 per cent of P&G stock, demanded a new seat on the board for Peltz, and additionally it called for streamlining its current 10 business units into just three. (Read the FT’s interview with Peltz here to understand more on Trian’s arguments). 

What was P&G’s position? The maker of household brands such as Tide detergent and Gillette razors has been resisting Trian’s calls for change as it believes that the current management and board are best placed to turn round the company, which in recent years has failed to adapt to significant shifts in consumer tastes and shopping habits.

Was the election always meant to be close? Advisers close to P&G consistently said that it would be a close election, which (as cynical reporters) we interpreted as ‘P&G is definitely losing’.

Peltz never said it publicly, but the 75-year-old was convinced he’d win. After all, Trian won the support of the most influential independent proxy advisers, ISS and Glass Lewis, plus that of key P&G investors including Yacktman Asset Management and Calstrs

What next? To be honest, it’s unclear. Hopefully, it won’t turn into a farce — that would be the worst outcome for P&G’s shareholders. But anything can happen on Wall Street. 

Was this really the most expensive proxy ever? Yes. Trian poured $25m into the fight, while P&G hired a host of blue-chip advisers — Goldman SachsMorgan StanleyLazard and Centerview Partners — to defend the board, and spent at least $100m, according to people familiar with the matter. 

Reminder: We’ll be hosting a get-together for readers/friends of DD in NYC on October 18 at Louie and Chan from 6.30pm to 9pm. Come by to network, meet James, Sujeet, Arash and Neil from DD and have a drink. (RSVP:

Welcome to Due Diligence. DD is your curated briefing on deals and dealmaking from the Financial Times. Each day we break news, provide analysis and select a few topics in corporate finance, M&A and private equity to give you deeper insight. We know you are busy, so we cut through the noise on the most important trends and select smart reads from across the FT and elsewhere. You’ll also find the latest industry job moves and get a round-up of major headlines.

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Pfizer and Honeywell go for a spin

It’s a classic M&A tale for corporate America. First, you put them together, then you break them apart. That’s how bankers and lawyers (and M&A reporters) continue making a living. 

On Tuesday we saw US industrial conglomerate Honeywell spin off not one but two different units, while pharma giant Pfizer put its consumer healthcare business up for sale. 

The two (or three) deals are totally unrelated but they show how more often than not you can create more value by allowing businesses to grow independently rather than clubbing them together with a series of unrelated units. 

  • Honeywell’s move will create two publicly listed companies, one containing its turbo charger unit, which will generate revenues worth about $3bn, and another group uniting its home heating and security businesses, which will have revenues of about $4.5bn. 

  • The industrial conglomerate’s decision to shed these units comes after it came under pressure from activist investor Third Point to spin off its entire aerospace unit. That’s not what Honeywell went for but it certainly shows the industrial group’s willingness to address some of the concerns raised by investors. Read the FT story on the deal here.

  • Pfizer’s decision to spin off its consumer business could fetch a whopping $14bn, according to the FT’s David Crow. He also added that the sale could spark a flurry of deal activity, including Pfizer buying a large competitor.

  • In the meantime the most likely buyers for Pfizer’s consumer assets are GlaxoSmithKlineBayerSanofi and Johnson & Johnson. Read the FT’s story on the deal here plus Lex’s take here.

In China, the party never stops

For years, tech start-ups have tried to distance themselves from the country’s ruling Communist party. 

That is changing in the wind-up to a crucial meeting later this month when the party’s next leaders will be chosen, writes the FT’s Emily Feng. Read our full story here.

China’s tech entrepreneurs are now publicly embracing closer party ties. More than 35 tech firms in Beijing alone have voluntarily set up party committees while some of the biggest companies have advertised their compliance with party objectives.

Simultaneously, the party itself has stepped up its outreach to the private sector, pushing forward party-friendly entrepreneurs and issuing a broad statement on innovation in the weeks leading up to its party congress.

Meanwhile, more than 30 Hong Kong-listed state-owned enterprises, representing more than $1tn in market capitalisation, have this year added lines to their central documents that place the party, rather than the Chinese state, at the heart of each group. And global groups such as BlackRock and Fidelity supported the move.

For China’s tech firms, the incentives are clear: “To be affiliated with the Communist party is good for our brand as well, because people are more confident we are a company that will do well,” says one entrepreneur.

Job moves

  • DD exclusive: Michael Hatchard, the most senior English lawyer at Skadden Arps, is to retire from the US law firm where he has worked for more than two decades as an adviser on some of the largest and most complex crossborder and UK transactions attempted. Mr Hatchard, 61, will step down from his position as a London-based Skadden partner at the end of this year, though he will remain as a strategic adviser to the firm. Read the full FT story here.

  • Steven Lipin launched a new PR firm called Gladstone Place Partners on Tuesday, as the former business journalist seeks to steal market share from more established corporate communications rivals. The move comes six months after Lipin quit Brunswick Group, the London-based global communications firm he joined 16 years ago from the Wall Street Journal, where he covered mergers & acquisitions. Read the full story here.

  • KKR, a US buyout fund, has hired Iñaki Cobo Bachiller to lead its healthcare unit. He joins from CVC Capital Partners, where he was a senior managing director. He will replace Dominic Murphy, the star dealmaker who earlier this year left the firm to set up his own €1bn fund. Read full story.

  • Advent International, a private equity firm, has hired Mark Wood as a part-time operating partner. Wood has held several senior management positions in his four-decade-long career, including chief executive of Axa UK, chief executive of Prudential UK and Europe, chairman and chief executive of Jardine Lloyd Thompson (JLT) Employee Benefits and chairman of Lloyds-underwriter, Chaucer

  • General Atlantic has hired Michelle Dipp, co-founder of Longwood Fund, as a managing director in the firm’s New York office. Dipp will be a senior member of the private equity firm’s healthcare team and will focus on biopharma and life sciences.

  • Former GlaxoSmithKline pharma head Abbas Hussain has joined C-Bridge Capital, a Chinese private equity company that invests in biotech, as senior partner. Full story here in Endpoints. 

  • Honeywell announced late last week that Anne Madden would become a senior vice-president and general counsel reporting to CEO Darius Adamczyk. Madden has served as vice-president of corporate development and global head of M&A at the US industrial conglomerate since 2002. 

Smart reads

  • Evercore The 20-year-old investment bank has jumped up the advisory league tables thanks to high-profile hires from top firms. It now regularly takes lead roles in the biggest and most complex M&A transactions (Euromoney)

  • Commerzbank: You’ve read our DD from yesterday but now our new man in Frankfurt, Olaf Storbeck, gives you a deeper dive into Germany’s number two lender and the subject of M&A interest (FT)

  • Client states: Chinese investment into emerging markets is proving a powerful agent for change. In Cambodia, which has been reliant on western aid for decades, China’s “no-strings-attached” investment might even be helping the country’s longstanding strongman hold on to power for a few more terms. (Bloomberg)

  • HelloFresh’s “active” customers: The company has unveiled IPO plans, but what’s the line between active and inactive customers? (FT Alphaville and Lex)

  • Ex-Blackstone dealmaker stumbles Chinh Chu’s healthcare group Constellation is said to face potential cash crunch. (FT)

News round-up

McKinsey seeks to defend fees in Eskom case (FT)

Activist hedge fund Elliott takes aim at Smith & Nephew (FT)

Nisa board recommends Co-op £143m takeover offer (FT)

Ikea looks for further deals after TaskRabbit purchase (FT)

SoftBank leads $164m bet on digital-mapping start-up Mapbox (WSJ)

UK IPOs: cold fish (FT Lex)

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