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Morning Brief: Starboard Demands Deal Records From Monotype

The activist hedge fund is seeking the digital printer’s books and records so it can investigate the company’s July 2016 acquisition of Olapic, Inc.

  • By Stephen Taub

Starboard Value is turning up the heat on Monotype Imaging Holdings. The activist hedge fund is seeking the digital printer’s books and records so it can investigate the company’s July 2016 acquisition of Olapic, Inc.

In a regulatory filing, Starboard asserted that Monotype’s decision to do the deal “cannot be the product of rational or disinterested corporate decision-making.” The hedge fund also insisted there was “a lack of proper board oversight” during the due diligence phase leading up to the deal. Starboard pointed out that on the day the deal closed, Monotype’s stock fell as much as 30 percent, adding that analysts had noted the dilutive nature of the transaction, as well as additional risks. “It seems apparent that even basic accounting due diligence would have detailed Olapic’s contract structure, its revenue recognition policy, and any changes to revenue recognition that would be required post acquisition,” Starboard asserted in the filing.

Monotype had announced a restructuring of the Olapic business in November 2017. Starboard currently owns 8.2 percent of the shares. On January 31, Starboard nominated four individuals to the board of directors.

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Shares of Israelis drug maker Teva Pharmaceuticals surged 7.6 percent to $20.80 after Warren Buffett disclosed that he had taken a $358 million stake in the company. Highfields Capital had boosted its stake in the stock to more than 34.7 million shares in the fourth quarter of last year. It is now the fifth largest shareholder, with the stock becoming the hedge fund’s fourth largest U.S. long position, according to regulatory filings. Brahman Capital also established a new stake during the fourth quarter, amounting to nearly 10 million shares. Teva Pharmaceuticals is now the hedge fund’s seventh largest U.S. long bet, according to filings.

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Ari Glass’ Boothbay Fund Management disclosed that it owns 7 percent of the Mudrick Capital Acquisition Corporation, which went public last week. Mudrick is a blank check company formed to do a merger or some other deal, with a goal of focusing on post-restructured companies. The company is led by distressed credit hedge fund manager Jason Mudrick of Mudrick Capital.

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