eSpeed Inc. (NDAQ:ESPD) shares moved up $1.13, or 11.71%, to $10.87 today after the company's takeover offer for Cantor was rejected. Meanwhile, Chapman Capital disclosed a 9.3% stake in the company and demanded consent to replace eSpeed directors at the company's 2007 annual meeting. The hedge fund also reiterated its demands that the board immediately retain an independent auditor to review the Joint Services Agreement, compel the conversion of all Class B common shares into Class A common stock, and engage an investment bank to maximize shareholder value via an auction of the company.
Robert L. Chapman, Jr., Managing Member of Chapman Capital, commented, "Chief
Executive Howard Lutnick's three-kingdom reign over Cantor Fitzgerald, eSpeed
and BGC Partners appears so infested with potential conflicts of interest and
incestuous inter-company transactions that a completely new set of corporate
governors may be required to exterminate any vermin from eSpeed's board room.
Chapman Capital finds it astonishing that Mr. Lutnick may believe he retains the
residual credibility necessary to bedazzle a new group of investors in the
proposed BGC Class A concoction after stupefying eSpeed Class A shareholders
with years of underperformance and apparent disrespect."
Regarding Chapman Capital's demand for the immediate auction of eSpeed, Mr.
Chapman stated, "The non-return of 24 straight business days of telephone calls
from eSpeed's largest Class A owner is something one might have expected from
multi-kingdom conflicted tyrants such as Hollinger International's Conrad Black,
but not someone as conscious of his public reputation as Mr. Lutnick. Moreover,
today's disclosure of the seemingly impulsive rejection of Tullett Prebon Plc's
premium acquisition proposal has done nothing but heighten our concerns that
Napoleonic behavior continues to be condoned by eSpeed's director fiduciaries."
In the end, if the hedge fund is successful in obtaining seats on the company's board of directors, it is likely that there will be some kind of a process to explore a sale of the company. Until then, investors and shareholders have to wait to see if the company will take action to eliminate some of the barriers to making this happen. Regardless, this is definitely a stock
worth watching!
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