Hedge fund Ides ask Monro to pressure shareholder preventing company sale
14/07/2022 13:00
By Angelique Chen
July 14 (Reuters) - Hedge fund Ides Capital on Thursday
asked U.S. car service and tire center operator Monro Inc
MNRO.O to pressure its controlling shareholder to drop a veto
to a sale of the company.
In a letter to Monro seen by Reuters, Dianne McKeever, Ides
co-founder and chief investment officer, said she was "aware"
that potential buyers of the company had been rebuffed. She did
not disclose the source of this information in the letter.
McKeever said she believed the reason Monro was not
exploring a sale was because its controlling shareholder,
83-year-old investment banker Peter Solomon, was demanding an
"onerous" premium to allow a deal. Solomon owns just 2% of Monro
but controls it through supervoting shares.
Solomon exercised his veto at Monro's annual general meeting
last year to retain control of the company, blocking a
resolution by Ides to do away with supervoting shares even
though the proposal was backed by 88% of shareholders.
Monro has said it has no legal mechanism to take away the
rights bestowed by supervoting shares.
Ides told Monro the car service company should form a
strategic board committee to engage with potential buyers. If
Solomon blocks a sale by asking for more than what bidders
offer, Monro should disclose this in accordance with its
obligations under securities laws, Ides said.
Were this to fail, Ides said Monro's board of directors
should resign. Ides also called on Monro shareholders to
withhold their votes for the five directors up for election at
this year’s annual meeting on Aug. 16 to register their
frustration.
A Monro spokesperson did not immediately respond to a
request for comment.
Shares of Monro, which has a market value of about $1.5
billion, are trading at a 30% discount to its peers, Ides said
in its letter. The stock has shed nearly a quarter of its value
since the beginning of the year.
(Reporting by Angelique Chen in New York; Editing by Anirban
Sen and Tom Hogue)
((Angelique.Chen@thomsonreuters.com;))