Elliott Target American Capital to Start Full Strategic Review

  • Asset manager also boosts share buybacks up to $1 billion
  • Activist Elliott protested BDC spin plans in proxy documents

American Capital Ltd., the asset manager targeted last week by activist Elliott Management Corp., plans to “undertake a full strategic review of all alternatives,” including a sale.

American Capital said Wednesday it has formed a committee of four board members and is working with advisers at Goldman Sachs & Co. and Credit Suisse Group AG to examine “alternatives for maximizing shareholder value, including a sale of the company or its various business lines in whole or in part.” It also boosted its share buyback to as much as $1 billion, from up to $600 million.

Elliott on Nov. 16 disclosed a new 8.4 percent stake in American Capital and started a proxy campaign urging shareholders to oppose the plan to spin out BDC assets, including a website at www.BetterACAS.com. The activist said the spin would “put valuable assets at risk, serve to entrench management and significantly limit options for future stockholder value creation.”

Elliott also criticized management for poor capital deployment, excessive overhead expenses, and the board for lacking expertise and compensating poor performance. It called for new directors, a strategic review, cost cuts and an assessment of its portfolio and capital allocation. By Nov. 19, American Capital added director David G. Richards, boosting its board to 10 members.

Elliott, which manages about $27 billion, has focused most of the hedge fund’s U.S. activist campaigns on enterprise software and hardware technology companies. The New York-based firm has occasionally expanded into other industries, including a recent investment in metals group Alcoa Inc., and sporting-goods retailer Cabela’s Inc.

Before it's here, it's on the Bloomberg Terminal.