Would appreciate your thoughts on the recent back and forth letters better OneMove/Engine and DND's board. Have you seem similar scenarios with other companies in the past and have they resulted in positive outcomes?
Thank you in advance,
Greg C.
The activist campaign for corporate governance change is quite familiar. The outcomes of course vary. Gildan recently saw its entire board resign after a fight, a fight which cost the company about $40M. The recent corporate battle between Engine and OneMove (which owns less than 15% of DND) and DND is mainly because of the company’s significant operational inefficiency and financing risks that have been around for quite some time. The outcome of these situations is highly uncertain, and these situations usually lead to lawsuits and proxy fights. For example, Bill Ackman succeeded with his activist campaign with CP but failed with ADP. However, after these events, management tends to be more aware of improving operations in the future and if new board members get added then there can be catalysts for improvement. DND needs help, certainly. For example it proposed a buyout and then issued new stock at much lower levels. In our view the board seems to have been making things up as they go. We would welcome a change there. Debt is too high and it has never made money. The dividend initiation was also a bit unusual for a growing tech company still in its early days.