A shareholders group waging a proxy contest with Ferro Corp. says it is disappointed with the Mayfield Heights’ chemical company’s response this week to a buyout offer from A. Schulman Inc.
The shareholders, made up of investment firms FrontFour Capital Group and Quinpario Partners LLC, issued a letter Thursday morning stating they were disappointed with Ferro’s latest earnings figures — the company lost $64 million in the fourth quarter and lost $374 million on sales of nearly $1.8 billion in 2012 — and also criticized how it handled Fairlawn-based Schulman’s buyout offer.
Polymer company Schulman on Monday publicly revealed that Ferro’s board rejected an offer to buy the company for $6.50 a share, half in stock and half in cash, plus debt in a deal worth $855 million. Schulman, which makes compounds and resins, said Ferro’s products would complement its offerings. Buying Ferro would about double the size of $2.1 billion Schulman.
“The [FrontFour and Quinpario] committee supports the company fully exploring the potential sale of Ferro at a price that fully and fairly values the company, whether to A. Schulman or any other potential acquirer,” the shareholders group wrote. The group, which calls itself the Shareholder Committee for the Future of Ferro, is running a slate of three candidates to Ferro’s board of directors.
The committee said it also was disappointed that Ferro never publicly disclosed Schulman’s “overtures” dating to last November.
“Had the best interests of shareholders been a priority to the Ferro board, we believe it would have at the very least attempted to engage in meaningful discussions with A. Schulman in order to negotiate a higher price that would maximize shareholder value,” the committee wrote. “After all, what would be the harm in entering discussions with A. Schulman? While we do not view A. Schulman’s current offer as adequate, shutting the door on this offer within only two weeks of its submission without entering into a meaningful dialogue with A. Schulman suggests entrenchment which simply will not be tolerated by the shareholders.”
In a related item, at the financial website Seeking Alpha, an anonymous columnist that uses the name The Value Investor wrote this week that Ferro management lacked credibility. The writer said he or she did not own stock in either Ferro or Schulman.
“It is up to management to create value in the short term, otherwise Schulman’s offer will look too good to refuse its shareholders,” the writer said.
Shares of Ferro rose 7 cents Thursday to $6.91. Before Schulman’s offer was disclosed Monday, Ferro stock had closed at the end of last week at $5.20. Shares of Schulman lost 9 cents to close Thursday at $31.73.
Jim Mackinnon can be reached at 330-996-3544 or firstname.lastname@example.org.