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Morning Brief: Starboard Increases Pressure on Two Companies

Jeffrey Smith’s firm says Newell Brands’ deal with Carl Icahn will not solve the company’s problems and that Forest City Realty Trust is undervalued.

  • By Stephen Taub

Starboard Value said it will continue to pursue its proxy fight with Newell Brands despite Carl Icahn’s recent deal to secure four seats on the board of directors. “We do not believe that the recent changes at the company, including the agreement with Carl C. Icahn, are sufficient to address Newell’s subpar operating and financial performance,” stated Starboard’s Jeffrey Smith in a letter to shareholders. “We believe poor execution and a series of operational missteps have resulted in severe share price underperformance compared to both industry peers and the broader market. Therefore, we believe that the current situation is unacceptable.” Starboard said it will submit a minority slate of director nominees for the board of the consumer products company known for its Rubbermaid brand, among others.

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In a separate filing, Starboard Value said it boosted its stake in Forest City Realty Trust to 5.7 percent. In a new 13D filing, the activist hedge fund firm headed by Jeffrey Smith said the stock was undervalued and an attractive investment opportunity. On March 22, the real estate company said it would remain independent after receiving several acquisition bids. It also announced an agreement with Starboard, which owned 3 percent of the shares at the time; Scopia Capital Management; and RMS. Under the deal, the company, which a year earlier scrapped its dual stock structure, said nine current directors agreed to resign from the board. In addition, Starboard and Scopia would each be able to appoint one additional director to the board. On April 2 Starboard recommended Gavin Molinelli, one of its partners, as its appointee.

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Elliott Management has taken a more than $1 billion stake in several Hyundai Motor Group companies, according to Bloomberg. The sometime-activist firm headed by Paul Singer is calling on the Korean company to further simplify its ownership structure despite recent moves. “More needs to be done to benefit the companies and stakeholders,” Elliott said in a statement, according to Bloomberg. “Elliott calls on management to share a more detailed road map as to how it will improve corporate governance, optimize balance sheets, and enhance capital returns at each of the companies.” According to the report, Elliott holds positions in car makers Hyundai Motor Co. and Kia Motors Corp. and parts maker Hyundai Mobis Co.

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Mark Kingdon’s Kingdon Capital Management said in a regulatory filing that as of April 3, it owned a little more than 2.2 million shares of Eleven Biotherapeutics, or 5.14 percent of a biologics oncology company. It did not own any shares at year-end. The investment is passive.

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