Starboard Urges Calgon Carbon to Boost Share Buyback Program

Calgon Carbon Corp., a water-purification company, was urged by activist investor Starboard Value LP to buy back as much as $200 million of stock and refinance debt.

“Calgon should use available funds and borrowings to repurchase $150 million to $200 million of its currently undervalued stock as soon as possible,” Starboard, which holds 9.7 percent of the company, wrote today in a letter to Chief Executive Officer Randall S. Dearth. Calgon could also improve tax efficiency by listing some carbon assets in a master limited partnership, Starboard said.

Calgon has increased 28 percent since Starboard disclosed a 7.7 percent stake in the company in January. In March, the company agreed to add two independent directors to its board, including Louis S. Massimo, a former chief operating officer of Arch Chemicals Inc., who was backed by Starboard.

Gail Gerono, a spokeswoman for Calgon, didn’t immediately return a message seeking comment on the Starboard letter.

Although Pittsburgh-based Calgon is cutting costs and began a $50 million share buyback, profit has trailed peers, Starboard Managing Director Jeffrey C. Smith said in the letter. Starboard this year has advocated the breakup of Smithfield Foods Inc., called for buybacks at Wausau Paper Corp. and sought new board members at chipmaker Emulex Corp.

Calgon rose 1.7 percent to $20.29 as of 10:50 a.m. in New York after earlier climbing as much as 2.6 percent. The shares have surged 42 percent this year compared with a 9.2 percent gain by the 20-member Bloomberg World Water Index.

The company is scheduled to report third-quarter earnings tomorrow.

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