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The Morning Brief: Avon Reaches Deal with Barington-led Investor Group
Avon Products has reached a compromise deal with an investor group led by James Mitarotonda’s Barington Capital Group, thus avoiding a proxy fight. Under the deal, Barington — whose group includes NuOrion Partners AG and other investors who collectively own more than 3 percent of the shares — will be able to approve the appointment of an independent director to Avon’s board, which will be selected by Avon and Cerberus Capital Management. Barington also agreed to withdraw its nominations for directors at Avon’s 2016 annual meeting.
In December, Cerberus agreed to invest $605 million in the beauty products company. Under their deal, Cerberus will invest $435 million in Avon Products in the form of convertible perpetual preferred stock. In addition, Avon North America will be separated from Avon Products into a privately-held company majority-owned and managed by Cerberus. Cerberus will acquire an 80.1 percent stake in Avon North America in exchange for a $170 million equity investment.
Canyon Capital Advisors fired off a letter to the board of directors of Ambac Financial Group detailing a number of concerns raised by employees and others about “the conduct, integrity and veracity” of Ambac president and chief executive officer Nader Tavakoli. Among the employees’ concerns: Tavakoli incurred “excessive and personal expenses” paid for by the company and was paid compensation “disproportionately borne by Ambac.” Canyon also asserted that a shareholder who supported Tavakoli on an earnings call was actually CEO of a company in which a fund previously managed by Tavakoli was invested.
“Canyon Capital believes these concerns reinforce those it previously expressed in seeking to review Ambac’s books and records relating to Mr. Tavakoli’s compensation and appointment as Ambac’s permanent President and CEO,” the hedge fund states in a public announcement. Canyon owns over 2.2 million shares, or nearly 5 percent of Ambac’s shares.
Canyon previously requested access to the books and records of Ambac and its subsidiary Ambac Assurance Corporation, seeking information related to how Tavakoli was appointed and compensated. The letter also accuses Tavakoli of standing in the way of the company’s policy claim buybacks. “We understand that his actions behind-the-scenes interfered with the work of Ambac employees in implementing the policy claim buyback strategy and caused the company to lose pricing advantage, thus harming stockholders,” the letter states.
Shares of hedge fund favorite Pandora fell more than 12 percent after the streaming music company announced a major management shake-up. As a result, CEO Brian McAndrews is out and co-founder Tim Westergren is returning as CEO. Investors are said to believe the moves reduce the chances the company will be put up for sale.
Another day, another sharp move for the shares of SunEdison. This time, the renewable energy’s stock surged by more than 4 percent, to close at $1.26, after it announced it will temporarily suspend contributing company stock to the retirement accounts of its directors and executive officers.
Shares of Valeant Pharmaceuticals International dropped another 7 percent or so to close at $28.86 after the Senate Special Committee on Aging said it subpoenaed the drug maker’s CEO, J. Michael Pearson, to testify at hearings on April 27 regarding the price of drugs.