Starboard Value LP , the largest common shareholder of Office Depot, Inc.
ODP, with a 14.8% ownership stake, delivered a letter today to the
independent members of the Company's Board of Directors (the "Board")
denouncing the Board's adoption of a "poison pill" rights plan. Starboard
demonstrates in the letter how the "poison pill" is part of a scheme designed
to preserve and entrench the Board by limiting the influence of shareholders
over Board composition and other matters, while allowing the Board to maintain
and increase its effective voting control over the Company.
Specifically, Starboard explains how the "poison pill" when taken together
with the voting agreement provisions under the Company's Investor Rights
Agreement with BC Partners, Inc. effectively provides the Board with current
voting authority over securities representing in excess of 22% of securities
eligible to vote while limiting common shareholders to economic ownership of
only 15% and maximum voting authority of only 11.7%. Further, Starboard
highlights specific exemptions under the "poison pill" that allow the Board to
further increase its effective voting authority while at the same time
diluting common shareholders' voting authority. One such exemption paves the
way for the Board to continue to pay in-kind quarterly dividends to BC
Partners on its 10% perpetual preferred stock. Another exemption permits BC
Partners to acquire another 2% of common shares. These exemptions are
particularly egregious since BC Partners is required to vote with the Board on
the election of directors and other matters that are up for shareholder
vote.
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