Lear reaches deal with dissident shareholders, expands buyback

By Dustin Walsh
CRAIN'S DETROIT BUSINESS

Published: April 2, 2013 12:37 pm ET
Updated: April 2, 2013 12:39 pm ET

Related to this story

Topics Automotive

DETROIT -- In the midst of a proxy fight with dissident investors, U.S. supplier Lear Corp. announced an agreement with shareholders Marcato Capital Management LLC and Oskie Capital Management LLC to expand a stock buyback and keep the hedge funds' nominees off Lear's board.

Under the deal, the seating and electronic supplier, which counts Europe as its top sales market, will further accelerate its current $1 billion share repurchase program, buying back $800 million in stock over the next 12 months and starting a new $750 million share repurchase program over three years following the completion of the current plan.

In a phone interview with Crain's Detroit Business, Lear CEO Matt Simoncini said the compromise was fair and the accelerated and new repurchase program still leaves enough cash for acquisitions and other events.

"The one thing we [Marcato, Oskie and Lear] have in common is that we are all focused on shareholder value," Simoncini said. "We may have had different views on size and pace, but this is a nice compromise."

The agreement comes only a few weeks after Lear and the hedge funds engaged in a proxy fight over board nominees. Marcato filed with the U.S. Security and Exchange Commission to seat its founder Mick Maguire, Oskie founder David Markowitz and Enrico Digirolama, senior vice president at Allstate Insurance and former CFO at General Motors. Lear sought to reinstate its board.

Since the start of this quarter, Marcato and Oskie have urged Lear, publicly, to double the $1 billion stock repurchase program.

Lear initially reacted to the hedge fund demands in February by accelerating the buyback program and raising its quarterly dividend to 17 cents a share from 14 cents. Lear also said it would buy $600 million of its own shares this year as part of its $1 billion share repurchase program.

Compromise reached

But the dissident investors maintained a strong position and took their concerns public, insisting on new board members.

Lear conceded to compromise with the hedge funds after feedback from other shareholders, Simoncini said.

"I would tell you, if it was specific to just 5 percent stockholders, if it was an extreme position, we wouldn't have listened," Simoncini said. "Here, we listened to a lot of them. When we reached out, we realized there was more of the feeling in our shareholder base that we could increase our position."

Under the agreement, Marcato and Oskie have withdrawn their nominees for Lear's board, but the supplier will expand to a nine-member board with a "mutually acceptable" director, the company said in a news release.


Comments

Lear reaches deal with dissident shareholders, expands buyback

By Dustin Walsh
CRAIN'S DETROIT BUSINESS

Published: April 2, 2013 12:37 pm ET
Updated: April 2, 2013 12:39 pm ET

Post Your Comments


Back to story


More stories

Image

Ascend targets nylon for auto applications, opening propylene monomer unit in Texas

April 18, 2014 10:57 am ET

Materials firm Ascend Performance Materials Inc. is in full operation at its new nylon 6/6 compounding line in Florida and will break ground by the...    More

Image

German auto supplier Dr. Schneider opens second US plant

April 17, 2014 12:57 pm ET

Dr. Schneider Kunststoffwerke GmbH, a German supplier of plastic interior auto parts, has opened a $29 million manufacturing plant in Russell Springs,...    More

Huntingdon Fiberglass launching second line

April 16, 2014 2:18 pm ET

Huntingdon Fiberglass Products LLC is getting set to start up a second production line later this year and hire 15-20 new employees as it sees demand ...    More

Mexico reports rising auto production

April 14, 2014 1:18 pm ET

MEXICO CITY — Mexico’s automotive industry assembled an unprecedented 774,731 light vehicles in the first quarter, 6.5 percent up on the...    More

Image

Lanxess launches new compounding plant in Brazil aimed at auto market

April 11, 2014 12:32 pm ET

Lanxess AG has officially opened its auto-oriented thermoplastics compounding plant in Porto Feliz, Brazil.    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events