6/13/2019

Red Robin Issues Statement in Response to Vintage Capital

Business Wire (06/13/19)

Restaurant chain Red Robin on June 13 issued a statement in response to a 13D filing by Vintage Capital Management LLC, saying "Red Robin welcomes open dialogue with its shareholders and appreciates input towards the goal of enhancing shareholder value. In multiple conversations with Vintage, we have expressed our openness to Vintage's participation in our ongoing search to identify a world-class CEO, and to maintaining a constructive dialogue. Given our dialogue to date, we were surprised by the content of the letter we received today, as Vintage has not been willing to propose any CEO candidates. As discussed with Vintage, we retained The Elliott Group in April 2019 to assist in our CEO search process, and the Search Committee is interviewing a number of highly qualified and interested candidates. We are pleased with our progress to date and confident we will identify an excellent leader for Red Robin. Concurrent with our CEO search process, Red Robin has a strategy in place to drive renewed growth and shareholder value, and we continue to execute on our 2019 strategic priorities, including stabilizing dine-in revenue by reinforcing Red Robin's compelling Value proposition; continuing building To-Go and Catering business; improving the Guest experience and recapturing Red Robin's known-for "Gift of Time" convenience; implementing digital platforms and restaurant technology solutions; and selectively refranchising and reassessing our real estate portfolio. Led by our Chair and independent directors, our Board is actively engaged in driving our strategic plan and remains open to all opportunities to create value. The Board comprises established industry leaders with diverse perspectives and operational expertise, including in the retail and restaurant industries. The Company's Board of Directors is focused on enhancing shareholder value and is mindful of its fiduciary duties to all shareholders. Consistent with its fiduciary duties, the Board would of course consider any bona fide offer made by Vintage."

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6/13/2019

Daniel Loeb's Third Point Calls for Breakup of Sony—Again

Wall Street Journal (06/13/19) Thomas, Patrick

Third Point LLC said in a June 13 letter to investors that Sony's (SNE) stock is undervalued and that the company's portfolio needs to be less complicated. Third Point said it has invested $1.5 billion in developing its stake in the company. Third Point called on Sony to spin off its semiconductor business and sell off stakes in Sony Financial and other units in order to position itself as a leading global entertainment company. This marks the second time in six years that one of the world's highest-profile investors has engaged the Japanese electronics giant. Last time, though, Loeb pushed for a very different kind of shake-up, advocating a spin-off of entertainment assets. According to Loeb, the semiconductor division is "often treated by investors as an afterthought" and should be spun off into a Japan-listed company known as Sony Technologies. The hedge fund has also called on Sony to consider selling its ownership interests in M3, Olympus, and Spotify Technology. By selling off these stakes, Third Point said Sony can "meaningfully reduce complexity" that has been a significant negative factor in the company's valuation. Sony said it will take the input of shareholders "seriously" and "engage in constructive dialogue" with shareholders. Meanwhile, Third Point has nothing but praise for Sony's Hollywood studio, noting that Sony Pictures is one of the few independent film studio franchises not owned by a major telecommunications or media conglomerate such as AT&T Inc. (T), Comcast Corp. (CMCSA), and Walt Disney Co. (DIS). And while Third Point is pushing for change, Sony executives announced in May they are looking at ways to create stronger links within its business, especially content, intellectual property, and direct-to-consumer services. The company also stated last month that it is considering joining with long-time game console system rival Microsoft Corp. (MSFT) on cloud and game-streaming technology.

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6/13/2019

Jana Builds Stake in Callaway and Plans to Push for Sale

Bloomberg (06/13/19) Deveau, Scott

Jana Partners has purchased a stake in Callaway Golf Co. (ELY) and is calling for the sporting goods company to conduct a strategic review, including weighing a possible sale. Jana said in a regulatory filing June 13 that it bought a 9.5% stake in Callaway Golf because it thinks the shares are undervalued. Jana intends to hold discussions with management about ways to boost the company's performance, including selling all or part of it. Callaway Golf, which has a market value of approximately $1.7 billion, was up about 16.4% on the news and traded up 14.1% at 11:53 a.m. in New York on June 13, its biggest gain since 2018. The shares had declined approximately 21% in the past year through the June 12 close. Although Callaway Golf doesn't comment on individual investors, its board and management are open to dialogue with all shareholders, according to spokesperson Scott Goryl. Jana is partnering with a number of consumer industry executives in the investment, including former Jarden Corp. (JAH) CEO James Lillie, former Nike Inc. (NKE) executive Cynthia Davis, and former vice chairman at Ralph Lauren Corp. (RL) Roger Farah. Callaway Golf in May said it was cutting its quidance for the Jack Wolfskin clothing line. Steven Zaccone, an analyst with JPMorgan Chase & Co. (JPM), said that move in the first full quarter of owning the brand will propel the "show me" narrative for investors debating the merits of the acquisition, according to a May 10 note to clients. After meeting with management, Zaccone said he was "incrementally more comfortable" with the guidance for the unit in light of the macro weather issues in Central Europe and China. The lower forecast was not a signal of underlying brand weakness, he noted.

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