US activist investor firm Starboard Value is urging US defence electronics supplier Mercury Systems to “immediately eliminate” its new anti-takeover plan, saying the measure is “not in the best interests of the company's shareholders”.
“We are available at your convenience to discuss this matter further,” Starboard told Mercury's board of directors in a 13 January letter. “[We] believe there is a bright future for the company and its stakeholders, and we look forward to continuing to engage with you to help unlock this value.”
Starboard, which owns 7.33% of Mercury's stock, said that if Mercury is unwilling to terminate the plan, it should at least increase the ownership threshold that triggers it from 7.5% to 15%.
Mercury had not responded to a request for comment on the letter at the time of publication.
Mercury's board approved the plan to prevent an unwelcome party from gaining control of the company. Mercury said its stock was undervalued and that the plan, which could make a hostile takeover prohibitively expensive, was needed to prevent anyone from gaining control of the company without paying a fair price.
Mercury disclosed its tactic in late December, days after another US activist investor firm, Jana Partners, said it had bought a 6.6% stake in Mercury. Jana said it intends to use its new ownership position to encourage Mercury to consider “strategic alternatives”, including a potential sale of the company, with the goal of “maximising value for shareholders”.
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