Sally Smith, CEO of Buffalo Wild Wings Inc. (BWLD), said the company is at a "pivotal time" as it navigates slower growth and pressure from Mick McGuire of Marcato Capital to fundamentally change strategy. On Oct. 26, the company reported a jump in third-quarter profits but posted a decrease in comparable-store sales. "Getting to positive traffic [growth] and positive same-store sales is a measure of success," Smith said, adding that the company's new CFO will help her and other executives set goals for 2017. McGuire became the company's single largest shareholder this summer, and he is pressuring Buffalo Wild Wings to diversify its board, change some executives, and sell a large portion of its company-owned stores to franchisees. Smith indicated that McGuire's ideas deserve "thoughtful consideration." She noted, "It is a fundamental shift, and we want to make sure we take our time in determining what the right approach is. That said, we are open to looking at it. We of course want to continue to drive shareholder value. And we like to think it's not just for today, but three, five and 10 years from now." The company recently announced the appointment of Alex Ware as CFO, effective Oct. 24.
General Electric (GE), which dropped its pursuit of SLM Solutions on Wednesday following opposition from Elliott Advisors, has announced new pushes into 3D printing. The U.S. industrial conglomerate on Thursday elevated its bid for Swedish 3D printer maker Arcam and confirmed a deal to buy privately held German 3D printing firm Concept Laser. GE upped its bid for Arcam from 285 crowns per share to 300 crowns, valuing the Swedish 3D printer maker at 6.2 billion crowns ($696 million). GE reportedly owns 46% of Arcam shares; and Elliott holds about 10% of Arcam, according to a disclosure notice issued this month. Meanwhile, GE is paying $599 million for a 75% stake in Concept Laser, in a move that will eventually allow it to take full ownership. Arcam, Concept Laser, and SLM are three of the world's top makers of machines for metals-based 3D printing. GE abandoned its bid for SLM after Elliott, which owns 20% of SLM, rejected its bid.
A former top executive at Corvex Management, Nick Graziano, has secured early-stage financing from Constellation Seeding to put his new hedge fund on track to begin trading Nov. 1. A presentation viewed by Reuters indicates that Greenwich, Conn.-based Venetus Partners LP will invest in mid-sized North American companies, buying stakes in underperforming companies and pushing management to make improvements. It is uncertain how much seed money was invested by Constellation. After working at Corvex for more than four years, Graziano left in early 2015 to set up Venetus, joining a small but growing group of managers who left established activist funds to create their own. However, as raising money for hedge funds grows more difficult as investors withdraw cash, more managers are willing to let potential investors become owners through seeding deals, often in exchange for an ownership stake. For instance, another seeder, Protege Partners, recently forged deals with former Baupost managing director Miguel Fidalgo's Triarii Capital Management and former Macquarie manager David Meneret's Mill Hill Capital.
PL Capital LLC is demanding changes at Banc of California (BANC), arguing the lender is facing a “crisis of confidence and credibility.” Banc of California’s stock plummeted the most in a decade on Oct. 18, after an anonymous short-seller’s report claimed the bank’s senior managers had ties to an imprisoned con man. The lender’s stock rebounded the next day when the company denied the claims. PL Capital, which has been pressuring Banc of California to improve its governance since mid-2014, brought its stake up to about 6.6% after the report, noting it still believes the bank is undervalued. In a letter to the bank, PL Capital principal Richard Lashley wrote that the recent actions by the company are “completely inadequate to restore confidence.” Lashley called for the lender to replace the law firm investigating the claims, and for the bank to replace its board of directors, among other changes. In the Oct. 21 letter, disclosed Monday in a regulatory filing, Lashley said he was able to confirm some of the facts in the anonymous short-seller's report, which called the bank “un-investible” because of the alleged ties to Jason Galanis, a California financier. Yet Lashley said he does not agree with the short-seller's conclusion “that the Banc of California is in effect a criminal enterprise secretly controlled by Jason Galanis.” “We clearly do believe significant changes are needed,” Lashley wrote.
Just five months after Luis Amaral's Western Gate Investments emerged victorious in a battle to shake up Stock Spirits' board, it is embroiled in another clash with the distiller for excluding the two non-executive directors it succeeded in appointing in May from all four of the company's board committees governing audit, remuneration, director nominations, and disclosure. Western Gate Investments, the vodka-maker's biggest shareholder at almost 10%, also criticized the company's decision to add another three directors to its board. Amaral succeed in ousting Stock Spirits CEO Chris Heath after the company's market share slumped in its most important country, Poland, and its share price fell; Heath took early retirement in April. The following month, he won the backing of other shareholders to have Heineken and Cadbury Schweppes veteran Alberto Da Ponte and former PepsiCo manager Randy Pankevicz appointed to the board as independent non-executives. "Stock's board now has nine directors, just two short of Diageo, a company that is some 180 times larger," said a spokesman for Western Gate. "Today's announcement also confirms that the two new independent non-executive directors appointed in May 2016 have not been allowed to join any of the four board committees. This ignores the wishes of shareholders that those new directors play a full role in helping to turn the company's fortunes around." Western Gate added that it has been about two years since the company's first profit warnings, and its share price is about half of what it was before that warning. "We look forward to the forthcoming November 2016 trading statement to see whether the board has spent that two years wisely in turning its business around," Western Gate said.
The board of salt-to-software conglomerate Tata Sons removed Chairman Cyrus Mistry in a surprise move on Monday, replacing him with Ratan Tata, patriarch of one of India's most influential families. Tata, who had stepped down as chairman and was replaced by Mistry in late 2012, will lead the group as interim chairman for four months while the company seeks a replacement. While the board gave no detailed reason for the change, some media reports said there has been discontent with some of Mistry's actions, including asset sales. The 48-year-old has struggled with various issues in recent months, including a costly settlement with Japanese telecom operator NTT Docomo and the sale of Tata Steel's loss-making U.K. business, which has now been put on hold. Mistry's ouster still caught many off guard, though analysts and investors saw Ratan Tata's appointment as interim chairman as a way to ease concerns. "The impact will be a little softer with Ratan Tata taking over," said Gaurang Shah, analyst at Geojit BNP Paribas. The board made its decision at a meeting on Monday, with six of the nine board members backing Mistry's ouster, said a source. Mistry, who could not vote, remains a board director. News reports suggested that Mistry's Shapoorji Pallonji family, one of the largest shareholders in Tata Sons, may legally contest the move.
MediaNews Group Inc. (MNWG), already the top shareholder of Monster Worldwide Inc. (MWW), on Friday sought to nearly double its holding in the job-posting company. The investor launched an effort to buy a further 10% stake in Monster at $3.70 a share. MediaNews cannot surpass a 25% stake without tripping Monster’s change-of-control mechanism in a credit agreement. The offer from MediaNews represents an 8.8% premium to the share price in Monster’s pact with Dutch recruitment firm Randstad Holding NV, which MediaNews opposes. In August, Randstad agreed to buy Monster for $429 million, or $3.40 a share. MediaNews has criticized the Randstad deal, and last month said it planned to nominate seven members to replace Monster’s entire board, citing a lack of confidence in Monster’s current management. Also on Friday, Monster reported a surprising third-quarter loss and a bigger-than-expected decline in revenue. Monster said it swung to a loss of $180.5 million, or $2.03 per share during its third quarter compared with a profit of $175.8 million or $1.98 a share a year earlier. Revenue slid 13% to $144.8 million, led by a 16% decline in its North American business.
Alcoa (AA) is trading around $27, or 20% less than its 52-week high, as the aluminum company issued disappointing third-quarter earnings earlier this month with both top-line revenue and bottom-line income down from the second quarter. Even so, Alcoa saw its earnings per share rise significantly from $0.06 in the third quarter of 2015 to $0.33 in the third quarter of 2016. A major turning point in the company's 128-year history will occur on Nov. 1, when it offers a 1-to-3 reverse stock split as it spins off its value-added business into a new company, Arconic (ARNC). Elliott Management supports the split, which comes as the two companies have strengthened and can independently pursue their own strategic directions. There are concerns, however, about whether the two businesses really are strong enough to operate separately, given Alcoa's disappointing third-quarter results. The split is intended to break out the high-margin manufacturing operation from the slow-growth community business of its legacy upstream business, and the major risk is whether shareholder value will actually be created once the companies trade separately. There are questions about whether value-added, high-margin Arconic will be able to trade at levels high enough to absorb the dismal performance of the legacy upstream business, Alcoa.