ACTING IN CONCERT – is an unofficial English term or often called slang which is often used to describe a condition that is an individual or company that cooperates (acts as a unit/concert) to achieve certain investment goals. Acting in Concert is carried out by these parties by buying shares from the company that will be liquidated with the agreed agreement.
Acting in concert is thick with the world of business acquisitions where these actions are carried out together with the aim of avoiding the declaration of the reasons for the company being acquired and wanting to share ownership with close friends and relatives rather than outsiders. However, this action is strictly controlled by the law, so that if there is a violation of the provisions, for example the number of shareholdings that exceeds the provisions, the Investor will take legal action. So this action is purely for a purpose, namely wanting to dismiss top management or just wanting to be in control of the company, not to manipulate stock prices.
Effect of Acting In Concert on the company
Usually, companies that experience Acting In Concert will experience major changes both in their financial structure and operational activities. With the change in the structure of the board of commissioners and company holders, it is possible that the company will be in a Default condition, which is a condition where the company fails to pay its debts on bond ownership because the company has to pay the principal and interest.
Actually, if handled properly, the Acting In Concert action can run smoothly and will not bring many changes which of course will have a serious impact on the company, but if the shareholders sell their shares to a group of people or companies (Acting In Concert) there will be big changes in the company. company structure that leads to default, that’s the big impact of Acting In Concert.
There are several factors why the company failed to pay (Default), namely internal and external factors, one of the internal factors is the Acting In Concert and this action made the company have to do a stock buyback where the amount was very large, the impact of the stock buyback action will usually This makes the company’s cash depleted and even unable to pay the principal and interest on the company’s debt.
This action can be seen as creating an unbalanced condition in which the corporations unite to unite their voices in a particular plan. These disparate corporations are ultimately united by one common goal which makes it possible to destroy the opponent or to make their path easier.
In today’s economic world where monopoly is no longer possible, entrepreneurs or business people can do something called a shadow monopoly or semi-monopoly in order to destroy competitors. In addition, the goal is to create the climate or atmosphere they want for the healthy growth of their business.
You can imagine it’s like a music concert, where there is a conductor and all the players unite to produce harmony with the aim of producing beautiful music. Now Acting in Concert in the business world is also the same. They work together and unite to the accompaniment of inaudible songs to create a climatic condition in which their habitat will thrive.
The problem of Acting in Concert is often observed in the world of acquisitions. Investors are usually required to state a takeover intention or place a tender offer after acquiring a certain percentage of the shares in the company. However, some try to spread the percentage of ownership among the parties who are already partners in order to avoid price quotes. Regulatory bodies have determined that if people make joint acquisitions and the amount of ownership exceeds a set percentage, then the group must declare the agreement. Then, if investors find that their interests have been harmed by other people acting together, then they can claim compensation.
Examples of Acting in Concert in Real World
It is alleged that Bill Ackman, head of hedge fund Pershing Square Capital Management, and Michael Pearson, CEO of Valeant Pharmaceuticals International, agreed together to try to buy shares of Botox Allergan Inc. in 2014. A loan from Bill Ackman personally accumulated a large position at Allergan and then worked with Valeant to bid for the purchase of Allergan. Allergan, not wanting to be acquired by Valeant, and two state pension plans sued Ackman and Valeant for violating securities laws on internal trading grounds. Meanwhile, Allergan begins to strike a deal with Actavis Plc to thwart Ackman and Valeant’s efforts.
Eventually Actavis and Allergan finally finalized the deal in March 2015, which resulted in a huge investment return for Ackman. He squandered the profits and after he reinvested the proceeds into Valeant, whose massive debt levels and alleged fraudulent accounting practices led investors to flee. In addition, Valeant’s stock has soared by more than $250 per share in July 2015; then later Ackman sold his shares in March 2017, trading at around $11 per share.
It’s quite complicated, but I hope all my colleagues can understand. In Indonesia, acting in concert often occurs in several financial companies, but its scope is only limited to partner acquisition and additional vendors.
Key Points Acting In Concert
Some key points about acting in concert that we need to know in order to understand what acting in concert is, are:
Acting in concert refers to a collaborative process carried out by two or more parties to achieve a common goal, without a cooperation process even though the actions taken are not acting in concert.
In the financial market the purpose of acting in concert is not merely to gain a momentary advantage, but rather to gain control of a company or take over the company directly.
The capital market law requires parties who wish to take over a company must announce their move to the public after purchasing a certain percentage of a company, to avoid this obligation, some investors spread their purchases to a number of parties so that they are not obliged to announce their move to the public.
Acting in concert is an illegal act which if known by the stock exchange authority will be subject to legal action and administrative sanctions, parties who feel aggrieved by the act of acting in concert can take legal steps against parties who act in concert
