Ferro Investors Advised by ISS to Vote for Two Dissidents

Shareholders of Ferro Corp., a U.S. chemical company fending off an unsolicited takeover offer, should vote for two of three dissident director nominees, according to proxy advisory firm Institutional Investor Services Inc.

Investors should vote for Quinpario Partners LLC Chief Executive Officer Jeffry Quinn and FrontFour Capital Group LLC Co-Founder David Lorber, ISS said in an April 30 report. Quinpario and FrontFour have said they hold 4.3 percent of Ferro shares. ISS didn’t recommend a vote for a third open seat on the nine-member board of Mayfield Heights, Ohio-based Ferro.

“The dissidents have articulated a strong case that change on FOE’s board is warranted,” ISS said, referring to Ferro by its stock symbol.

Ferro has underperformed peer companies and its board “appears not to have given due regard to a very real initial indication of interest from a potential acquirer,” ISS said.

Shareholders are set to vote at a May 15 meeting, less than two months after Ferro rejected plastics maker A. Schulman Inc.’s $6.50-a-share offer. Schulman reiterated on April 22 that it may raise the bid if it can look at Ferro’s books.

The offer is 21 percent higher than Ferro’s average share price in the 20 days before the proposal and values Ferro at about $875 million, including net debt and outstanding exercisable options, according to data compiled by Bloomberg.

“We strongly believe that ISS reached the wrong conclusion in failing to recommend that shareholders elect all of” Ferro’s nominees, Ferro said in an e-mail today. Its nominees “are highly qualified, proven business leaders.”.

Ferro was unchanged at $7.04 in New York. The shares have gained 68 percent this year.