F&C Chairman Ousted as Investors Back Rebel Sherborne
F&C Asset Management Plc Chairman Nick MacAndrew was ousted after losing an eight-week battle against activist shareholder Sherborne Investors LLC.
Edward Bramson, Sherborne’s founder, was elected chairman of the fund manager at an emergency shareholder meeting in London today. Sherborne nominees Ian Brindle and Derham O’Neill will also join the board, replacing Brian Larcombe.
F&C, which takes its name from the 143-year-old Foreign & Colonial fund, has climbed 64 percent since Sherborne first bought a stake in August as investors speculated Bramson would take control of the firm. Sherborne, the fund manager’s biggest shareholder with an 18 percent stake, last month criticized F&C’s “flawed” strategy and pledged to work with the management to develop an alternative plan once investors approved the board changes.
“This is good news in the short term for people looking to lock in gains, which would have almost certainly been lost if Sherborne hadn’t won the vote,” said Danielle James, a Liverpool-based analyst at Shore Capital Plc with a “hold” rating on the stock. “In the long term, Sherborne needs to be a bit more vocal about what they plan to do with the business.”
The shares increased 4.4 percent to 89.3 pence as of 1:55 p.m. in London trading. The stock has risen 18 percent since Bramson called the investor meeting on Dec. 16.
Investors voted 65 percent to 35 percent in favor of removing MacAndrew from the board and 70 percent to 30 percent in favor of installing Bramson. Sherborne needed 51 percent support to succeed. O’Neill is a former senior partner at Clifford Chance LLP and Brindle is an ex-U.K. chairman of PricewaterhouseCoopers LLP.
“It is time for putting differences of opinion and judgment aside, for building bridges and most particularly for remembering that what matters most are the best interests of F&C,” MacAndrew said after announcing the vote.
MacAndrew, 63, and F&C’s management, including Chief Executive Officer Alain Grisay, urged investors to reject Sherborne’s proposals, saying they would destabilize the business. The proposed directors didn’t have enough fund management experience to be appointed to the board and Sherborne failed to suggest an alternative strategy, MacAndrew said last month.
Bramson founded Sherborne in the 1970s and made investments in U.K. firms including Spirent Communications Plc and U.S. companies such as Nautilus Inc. Spirent has climbed 166 percent since Bramson was appointed to the board in 2006 while Nautilus has dropped 51 percent since he was elected chairman.
Bramson criticized F&C’s board for its “expensive borrowings to pay for high-priced acquisitions” such as Thames River Capital LLC last year. He also said he would pursue “conservative financial policies in the future” after the firm’s net debt doubled from 2006 to 2010.
Asked about his future strategy by shareholders at the meeting today, the 59-year-old declined to comment, referring investors to his letter published last month. Bramson said he has no views on whether the company needs a share sale.
“The board will take that option if it’s necessary at the appropriate time,” he said. “We don’t have a position on that today.”
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