Lancaster Colony
(NDAQ:LANC) faced criticism on Friday over its governance policies from
a group of investors led by Barington Capital. The investors asked the
consumer products maker to substantive changes to its governance
policies as well as remove several takeover defenses that violate
shareholder rights. Changes to these policies could enable shareholders
like Barington to push for changes aimed at unlocking shareholder value.
In a
letter to the board of directors
on Friday, Barington Capital criticized Chairman and CEO John Gerlach
and the company's founding family for consolidating their control of
the company, saying, "We believe that the numerous defenses the company
has in place are excessive and demonstrate disregard for the interest
of Lancaster's public shareholders by facilitating the entrenchment of
the company's directors and executive officers and minimizing the
influence that shareholders have on the board."
Removal of these
provisions could pave the way for shareholders like Barington Capital
to unlock value. What might these actions include? Well, Lancaster said
in April 2006 that it was exploring strategic alternatives, including a
possible sale of its glassware and candles businesses. Meanwhile,
Barington also pressured the company to take on $300 million in debt to
finance and self-tender offer or similar transaction to create value
for shareholders. If either of these transactions materialized, it
could mean significant returns for shareholders. Combined, these
factors make LANC a stock
worth watching!
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