Adaptec Criticizes Steel Partners and Warren Lichtenstein
|October 5th, 2009||
|Adaptec Inc. (NASDAQ: ADPT), a technology data storage manufacturer, issued a strongly worded letter last week to its shareholders regarding the looming proxy battle between itself and minority shareholder Steel Partners. Steel Partners II, the hedge fund of famed activist investor Warren Lichtenstein, has moved to replace two members of Adaptec’s board with its own and effectively sell the company. Its proposal has also been supported by fellow hedge fund Arcadia Capital.|
Such intentions, says Adaptec, have earned Steel Partners the label of “abusive acquirer.” Amongst other messages seeking to persuade shareholders to votes its way in the proxy battle, Adaptec management is steadfast in defending the financial health and strategic growth prospects for its company. Taking it a step further, the letter even goes to highlight the erratic actions of Steel Partners. Regarding a strategic purchase that Steel Partners has criticized in waging its proxy battle, the Adaptec letter stated “in fact, all of Steel Partners' representatives voted "yes" on the financial plans they now criticize and "yes" on our 2008 acquisition of Aristos Logic, which Steel now disingenuously cites as a reason for its actions.”
In the second half of the letter, Adaptec went on to highlight its belief that Steel Partners is uncooperative, interested in “turn[ing] Adaptec into a corporate shell,” and has a past of pursuing such actions. The hedge fund, the company says, has been granted a voice on the board, but “it is not enough for them.” Two failed experiments of Warren Lichtenstein were also cited, specifically the ruling of a Tokyo High Court on Steel Partners’ actions against a Japanese company Bull-Dog as abusive and the New York Times’ criticism of Mr. Lichtenstein’s board resignation at BKF Capital as “throwing in the towel” following a 75% drop in share price.
Coupled with Steel Partners’ reduction in its Adaptec position by half this summer due to redemptions and its poor ability to serve its own hedge fund shareholders, the company seeks to persuade investors to maintain the present board and secure CEO Subramanian Sundaresh as chief. No formal deadline for proxy voting has been established.
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