US Ferro proxy fight gets conflicting recommendations

06 May 2013 22:31  [Source: ICIS news]

HOUSTON (ICIS)--The proxy fight at Ferro has received clashing recommendations, with the latest advisory firm supporting the three company-supported board candidates, the US-based specialty chemicals producer said on Monday.

The three Ferro-backed candidates recommended by the Glass Lewis firm are Richard Brown, Gregory Hyland and Ronald Vargo.

They are running against Jeffry Quinn, David Lorber and Nadim Qureshi. Quinn and Lorber were recommended by Institutional Shareholder Services (ISS), another proxy advisory firm.

Shareholders will vote on the nominees during Ferro's annual meeting, scheduled for 15 May.

Glass Lewis said that the company's three candidates played an important role in turning around the company's performance.

In addition, the company candidates have more relevant experience and skills when compared with the outside candidates, Glass Lewis said.

"Replacing them with less-experienced individuals who have less-relevant skills and questionable motivations would likely not result in a better outcome for Ferro shareholders, in our view," Glass Lewis said.

In recommending Quinn and Lorber, ISS noted Quinn's experience.

Quinn was the CEO of Solutia before the company was acquired by Eastman Chemical for $4.8bn (€3.6bn).

Quinn currently heads Quinpario Partners, a private investment and operating company that is focused on specialty chemicals and performance materials.

Lorber is a co-founder of FrontFour Capital Group, an investment advisor. In recommending Lorber, ISS said he has experience serving on other company boards, and he would provide an investor's perspective to Ferro.

In supporting the two, ISS noted what it considered to be Ferro's weak performance. “The company’s returns have been subpar over any relevant time period and when compared to both peers selected by the company and an applicable specialty chemicals index," it said.

Ferro's performance has been a key issue in the proxy fight.

If elected, Quinn and the others said they would attempt to persuade the rest of the board to adopt measures that they say would lower Ferro's costs and allow the company to focus on its core businesses.

Ferro has said Quinn and the other two would add no value to the board, and they have not made any productive suggestions for the company.

Ferro already is making progress on a programme intended to improve the company, the company said.

If the Ferro-backed candidates lose the election, then the outside candidates could revive A Schulman's hostile takeover bid.

A Schulman on 4 March bid $6.50/share to acquire Ferro. The offer valued Ferro at $855m, including an equity value of $563m.

Ferro rejected the offer.

Quinn and the others said that while the bid was low, Ferro should have at least talked with A Schulman and attempted to negotiate a higher price.

($1 = €0.76)

By: Al Greenwood
+1 713 525 2645

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