Starbucks offered Elliott a better deal than it initially requested after its monthslong campaign.

• This year, Elliott's greatest achievement may occur at Starbucks, starting with private talks about the activist's multibillion-dollar stake and culminating in a CEO change that was met with approval from investors and activists alike.
• The board would not have pursued Chipotle's Brian Niccol as a CEO replacement without the pressure Elliott brought to bear, despite Elliott not explicitly expressing a desire for a different CEO.

In May, SoftBank invested $2.5 billion in and held a $1 billion-plus position at . In June, SoftBank made a $2 billion stake in and invested an equal amount in Japanese conglomerate SoftBank.

Even by its own standards, Elliott Management has been operating at an unprecedented scale and frequency this summer, causing even the most experienced activism defense advisors to pause.

This year, the biggest win for the company was at , where private talks about Elliott's multibillion-dollar stake culminated in a CEO change that was met with approval from investors and activists alike.

The successful outcome at Starbucks was not only due to the replacement of an unpopular CEO with a food-industry legend, but also to the monthslong efforts of Elliott, which resulted in a stock price surge and pleased shareholders, Howard Schultz, and the board.

One advisor who has worked with both activists and companies stated that the deal set the company on a "transformational" path, which was generally well-received by everyone involved at Starbucks except former CEO Laxman Narasimhan.

Private negotiations turn public

Elliott had accumulated a Starbucks position worth $1.9 billion by June and had begun discussions with the company, according to sources who requested anonymity to discuss private matters. The activist investor's green-and-white letterhead had attracted the attention of directors and the media, who expected that the firm's plans would likely involve the dismissal of an underperforming CEO. Narasimhan, who had been the coffee chain's CEO until Tuesday, appeared to fit that description.

Since Narasimhan took over as CEO in March 2023, Starbucks' stock had decreased by approximately 24%. The company faced challenges with declining sales in the U.S., where traffic fell by 6% in the third quarter, and in China, its second-largest market outside of North America, where same-store sales dropped by 14%.

In late June, Elliott met with Narasimhan and then-Chair Mellody Hobson separately. The company was still grappling with its disastrous earnings report and slowing global demand. The activist's representatives emphasized the need for immediate action in both meetings, the sources said.

CNBC previously reported that Elliott did not ask Starbucks to fire Narasimhan.

Operational overhaul and boardroom fractures

In July, Starbucks presented a detailed strategy overhaul to its board, with a focus on improving its lagging China business and making changes to the board, according to sources.

Unlike some of its other campaigns, such as Southwest and Texas Instruments, it did not make those conversations public.

The talks were constructive, but it was evident that substantial alterations were necessary to prevent Starbucks' underperformance from becoming so severe that public intervention, such as one of Elliott's esteemed letters, might be necessary, the group stated.

The Wall Street Journal reported on July 19 that news of the activist's position at the company had broken, sparking a wave of attention and scrutiny. In the days that followed, reporting focused on the lasting impact of Schultz, with a Financial Times story revealing that the founder of the company was not in favor of the deal Elliott had proposed.

The activist's representatives met with roughly three-quarters of the company's board in more informal settings through July and into August, but the conversations played out against the backdrop of persistent leaks that people familiar with the deal said could only be coming from the boardroom.

A surprise departure

The board would not have pursued Chipotle's Brian Niccol as a CEO replacement without pressure from Elliott, despite Elliott not explicitly expressing a desire for a new CEO.

Hobson, who resigned as chair and became lead independent director at the same time as Niccol's appointment, stated on CNBC's "Squawk Box" that there were no discussions with Elliott regarding Niccol's appointment.

On Tuesday, the Ariel Investments co-CEO stated on CNBC that they eagerly anticipate discussing the new development with all their shareholders.

Starbucks' landing on Niccol was better than anything Elliott was asking for, despite the surprise of Narasimhan's departure.

The current CEO of Chipotle was responsible for a dramatic turnaround and modernization of the company, driving a stock price gain of more than 770% since 2018.

Starbucks has struggled with an overwhelming number of mobile orders at its stores, but the company has now improved its mobile order handling process.

On Sunday, Narasimhan discovered he was being removed from his position, as reported by The Wall Street Journal. On Tuesday, Starbucks shares experienced a 25% increase following the news, marking their best day since the company's 1992 IPO. Despite Elliott not advocating for Narasimhan's removal, there were likely no objections in West Palm Beach or midtown Manhattan, where the firm maintains two offices.

Starbucks' appointment of Niccol was a "transformational step forward," according to Jesse Cohn and Marc Steinberg, the managing partner and partner, respectively. They expressed their excitement about continuing their collaboration with the board as it strives to unlock Starbucks' full potential.

Neither Starbucks nor Narasimhan's representatives responded to CNBC's request for comment.