Sybase Inc.
(NYSE:SY) directors may have to fight for their job after an activist
hedge fund nominated its own slate of directors to the company’s board,
according to a Schedule 13D/A filing with the SEC. Sandell Asset
Management Corporation announced that it has notified Sybase Inc. of
its intention to nominate three highly qualified independent candidates
for election to the board of directors in 2008. Shareholders are hoping
that this move could help unlock value in the company’s shares, which
have remained somewhat stagnant.
Sandell’s move towards a proxy contest follows a letter and
presentation delivered to the company on October 12, 2007 outlining
specific actions the hedge fund believed the company should take to
improve value for all shareholders. Specifically, the Sandell requested
that the company immediately:
- IPO and spin-off 100% of the Mobility segment.
- Aggressively use the balance sheet to repurchase shares.
- Sell the company as a whole or in parts.
Since that time, the company has taken no discernable action on any
of these issues, nor has it taken any of its own actions to improve
value. Sandell continues to believe that the actions detailed in its
letter and presentation would materially improve the company’s
valuation to the benefit of all shareholders, and it intends to conduct
a proxy contest in order to realize those gains.
“We have attempted to encourage the company, both publicly and
privately, to take action to improve its current discounted share
price, but have been very frustrated by the apparent complacency of the
board and management towards creating value,” said Thomas Sandell,
founder of Sandell Asset Management. “We feel that shareholder
representation on the board is warranted to ensure that all
alternatives are being considered and a course of action is taken to
bridge the gap between the current share price and its inherent value.”
Overall, any of the actions suggested by Sandell could go a long way
in unlocking shareholder value. Proxy contests can be difficult and
expensive, however, and it is uncertain as to whether they will be able
to obtain the board seats that they need to enforce change. Regardless,
this is definitely a stock worth watching into the next annual meeting!
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