Spartech shareholder demands sale of company
Monday October 1, 6:08 pm ET
Spartech Corp.'s largest shareholder issued a letter on Sept. 27 to Spartech's Chairman Jackson Robinson and its board of directors advocating the sale of the company amidst a litany of complaints.
Reed, Conner & Birdwell LLC, which owns more than 3.1 million Spartech shares, almost 9.8 percent, wrote in the letter: "We have lost confidence in the board of directors to properly represent shareholders in maximizing the value of their investment in Spartech ... It is the duty of the board of directors to consider what value can be generated for shareholders from the sale of the company today and compare that to the present value of an operating plan led by a capable management team."
In addition, the letter "forcefully advocates" the board to hire a third party financial advisor and consider strategic alternatives for the company.
The letter, signed by Reed, Conner & Birdwell Principal Jeffrey Bronchick, accuses Spartech of a lack of communication with its largest shareholder, cites the company's inability to set a time table for its search to replace CEO George Abd who resigned in July and criticizes the recent acquisition of Creative Forming for $61 million.
"It is both inexplicable and lacking in basic common sense to make a $60 million acquisition without a current CEO and in the midst of a search for a new CEO who may or may not agree with the strategic direction represented by that acquisition, particularly when the math of share repurchases is overwhelmingly attractive at the current stock price," the letter states.
In the letter, Reed Conner asked for Spartech to develop a share repurchase program. The day the letter was addressed, Spartech authorized the repurchase of 2 million shares of its common stock. The authorized amount represents 6 percent of the company's approximate 32 million shares of outstanding common stock.
Reed, Conner & Birdwell LLC is a Los Angeles-based money management firm.
St. Louis-based Spartech Corp. (NYSE: SEH) produces engineered thermoplastic materials and molded and profile products.
Published October 1, 2007 by the St. Louis Business Journal
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