Emmis Shareholder Urges Board To Reconsider Sale Of Company
September 27, 2006 at 3:59 PM (PT)
A financial firm that owns 650,000 shares of EMMIS Class A common stock has sent a letter to EMMIS's board urging them to reconsider the possibility of selling off the company. The letter from ARNHOLD AND S. BLEICHROEDER ADVISERS LLC points out that the most recent failed talks between EMMIS Chairman/CEO JEFF SMULYAN and the board involved an offer of $16.80 a share, which represents a 40% premium over the average closing price of EMMIS shares.
"Why would the Special Committee of the board of directors of a struggling public company in a struggling industry spurn repeated efforts to take the company private at a substantial premium? We believe the answer lies in an extreme overreaction to perceived conflicts of interest arising out of Mr. SMULYAN’s personal and professional ties to board members, including the fact that only two of the nine board members (and only one Special Committee member) were elected by Class A shareholders voting as a single class," the letter states. The letter calls the board's refusal to sell at the $16.80 price "impossible to defend" because the board hasn't proposed an alternative to get full market value, SMULYAN won't sell to a third party, EMMIS is "not viable as a public company that can create long-term value for shareholders," and "time is not on our side," with no turnaround in sight.
The letter asks EMMIS' board to reconstitute its Special Committee and get SMULYAN back to the negotiating table and allow a shareholder vote with SMULYAN abstaining.