Griffon Corporation
(NYSE:GFF) may face more pressure from dissident shareholders after the
Clinton Group (CGI) and its affiliates disclosed an 8.3% stake in the
company and disclosed a letter to the board of directors. The activist
hedge fund expressed disappointment over the extent of the company's
decline in earnings and its inability to responsively adjust cost
structures, which total more than $20 million annually.
CGI
believes that the company's "mini-conglomerate" corporate structure
where management ostensibly oversees three unrelated businesses for
huge renumeration is simply unacceptable. While the company did retain
Goldman Sachs to explore
strategic alternatives, the hedge fund suggested that it be mandated to
narrow these to either a sale of the company in whole or in parts or a
public recapitalization aided by a qualified financial sponsor. The
hedge fund believes this is the best way to unlock value for
shareholder amid a string of un-kept promises and out-of-control costs.
Finally,
CGI also noted that the company failed to respond to any of the
management issues that were brought up in its previous letters to the
company - particularly, the devices in place to entrench management and
the board. The hedge fund threatened to conduct a proxy fight to
replace board members if the company failed to address these issues
soon. Combined, these factors make GFF a stock
worth watching!
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