Starboard Moves Ahead With GCP Proxy Fight Despite Outbreak

(Bloomberg) -- Starboard Value is pushing ahead with its second proxy fight since the outbreak of the coronavirus, arguing its board nominees for GCP Applied Technologies Inc. would be better able to navigate the company through the crisis.

The New York-based hedge fund run by Jeff Smith, which owns 9% of GCP, has nominated eight directors to take control of the chemical maker’s board. It plans to push ahead with the fight because it believes its slate of directors have the right skills to turn around the company, according to a regulatory filing Thursday.

“We recognize the Covid-19 crisis has created a difficult environment for many companies,” Starboard Managing Member Peter Feld said in a letter to shareholders. “GCP is no different and needs strong leadership and oversight during these challenging times. We believe the nominees we have put forth are uniquely capable to help govern the company through and after this crisis.”

GCP has underperformed peers since going public and it was time for a “new start,” he said.

Starboard won two GCP board seats last March after threatening a proxy fight. GCP subsequently launched a strategic review, including a potential sale, that failed to find a buyer. It has since implemented cost cuts and other measures, including the replacement of its chief executive officer.

GCP said in a statement that it had attempted to work constructively with Starboard to avoid a proxy fight. It called the proxy fight “self-serving” and “out of touch with the realities of the current operating environment and global crisis.”

“It is designed to undermine a board and management team -- that have been delivering positive financial and operating results and prudently managing the balance sheet -- with directors who have limited experience in the sector and have yet to provide any plan,” it said in an emailed statement.

GCP rose 5.8% at 11:45a.m. in New York trading Thursday, giving the company a market value of about $1.2 billion. The stock has fallen 43% in the past year.

Starboard has now launched two public fights since the markets collapsed amid the outbreak of Covid-19 in an otherwise quiet proxy season for activists. Last month, the hedge fund nominated four directors to the board of EBay Inc., and was criticized by the company for the timing of the fight given the outbreak of the pandemic.

Starboard was granted a seat on the board of EBay last year alongside fellow activist Elliott Management Corp. EBay has since sold Stubhub business and is marketing its classifieds business with interested parties.

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