Monro considers reforms after pressure by activist firm Ides Capital
26/10/2022 20:59
By Svea Herbst-Bayliss
NEW YORK, Oct 26 (Reuters) - Monro Inc MNRO.O on
Wednesday said it plans to refresh its board of directors and
will consider restructuring its equity shares after calls from
an activist investor for governance reforms and the possible
sale of the U.S. auto service company.
Monro Chief Executive Officer Michael Broderick, who took
the top job at the company last year, told investors and
analysts on an earnings call that the board had hired a search
firm to help find new director candidates and was looking to
hire a financial advisor to discuss options to recapitalize its
shares.
The financial advisor would help work on changes that "would
provide for all of Monro's outstanding stocks to have one vote
per share and for the elimination of veto power of one class of
stock over another," Broderick said.
While no final decisions have been reached, Wednesday's
announcement resonated with investors who have been frustrated
by Monro's sagging share price and the tight grip of the
company's controlling investor, investment banker Peter Solomon.
The company is currently valued at $1.5 billion and its
stock price has tumbled 22% since January.
Investors have long signaled they want each share in the
company to have one vote, but Monro has said it could not change
its share structure without Solomon's consent.
Solomon, 84, is able to overrule votes from all other
shareholders because he owns all of Monro's outstanding Class C
Preferred shares.
Pressure has been building on Monro since investment firm
Ides Capital began pushing for changes two years ago. It
ratcheted up in August when shareholders refused to re-elect two
board directors.
Ides, founded in 2015 by Dianne McKeever and Rob Longnecker,
began by asking for better returns, improved operations and a
more diverse boardroom and workforce. More recently, Ides called
for a strategic review committee to be formed to explore
alternatives for the company.
(Reporting by Svea Herbst-Bayliss; Editing by Paul Simao)
((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))