This week, activist hedge fund manager Steel Partners revealed that it had increased its holdings in Adaptec Inc. (NASDAQ: ADPT) by 188,931 shares, bringing its total holdings to 17,604,684 shares or 14.6% of shares outstanding. According to the Hedge Fund Solutions Catalyst Research Report, on October 30 Steel delivered written consents by stockholders owning more than 50% of the Company’s outstanding shares consenting to the removal of two Board members and the reduction in the size of the Board from nine to seven members.
Steel Partners now effectively controls the Board of Directors with four of the seven board members having been nominated or recommended by them.
Background Information:
HFS covered ADPT in numerous Catalyst Research Reports (most recently on August 7, 2009) highlighting Steel’s steady increase in ownership in ADPT since 2006. Steel obtained three board seats in 2007 through a settlement agreement with the Company following a proxy contest. In 2008 ADPT added one additional member to the Board (recommended by Steel) increasing the size to nine members. They also appointed one of Steel’s nominees as Chairman.
On November 3 2008 DE Shaw announced a 5% ownership stake in ADPT (up from less than 1% in July). Steel reduced their ownership in ADPT from 19.0% to 8.4% in July (due to redemption-related in-kind distributions to their investors – review HFS’s Special Report on SP’s portfolio at www.hedgerelations.com/research.html).
In August, following Steel’s reduction in ownership, the majority of ADPT’s Board voted to (i) replace Steel Partner’s nominee as Chairman, (ii) reduce the size of the Board from nine to seven members, and (iii) elected not to re-nominate two of the three Directors elected as part of the 2007 settlement agreement. Since this action was taken after the deadline for shareholders to run a contested election for additional board representation at the 2009 annual meeting, Steel Partners announced a consent solicitation seeking shareholder approval to remove two Directors, including ADPT’s CEO.
ADPT currently holds 3.20/share in net cash.
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