By: Rachel Abbey McCafferty
CRAIN’S CLEVELAND BUSINESS
April 24, 2013
CLEVELAND — A group of investment firms connected to Mario J. Gabelli has increased its stock holdings in specialty chemical maker Ferro Corp. of Mayfield Heights, Ohio, according to information filed April 23 with the U.S. Securities and Exchange Commission.
In sum, the Gabelli group now holds 16.16 percent of all of Ferro's shares outstanding. The group held 15.67 percent of the shares in its last filing on Feb. 25, and has been purchasing shares since the start of the year.
Gamco Asset Management Inc. and Gabelli Funds LLC hold the largest portions of the shares, at 9.68 percent and 4.99 percent, respectively.
Gabelli expressed frustration with the leadership at Ferro in an interview with Crain's Cleveland Business, saying he wants to see its leaders think of the shareholders when making decisions.
"And they're not doing it," he said.
Gamco, a New York-based investment advising firm, announced in the filing that the company intends to support the three individuals nominated for the board by the Shareholder Committee for the Future of Ferro. It has not yet decided how to divide the votes if the election for directors uses cumulative voting or if it will give its proxy to the shareholder committee, according to the filing.
The committee, led by FrontFour Capital Group LLC and Quinpario Partners LLC, sent a letter to shareholders last week, asking them to support Jeffry N. Quinn, David A. Lorber and Nadim Z. Qureshi as directors and saying that the current Ferro board has "clearly failed." The committee highlighted the turnaround experience of Quinn, Lorber and Qureshi in its letter.
Gabelli gave a few examples behind Gamco's decision, the most recent being Ferro's lack of disclosure to shareholders about a takeover proposal from Fairlawn, Ohio-based A. Schulman Inc. until after a decision rejecting the proposal had been made. A. Schulman, a supplier of plastic resins, subsequently decided to proceed with a hostile takeover bid of $6.50 a share in cash and stock for Ferro. That offer remains on the table.
Voting for the committee's slate of candidates would create "creative tension" on the board, Gabelli said.
Ferro released a letter to shareholders last week, encouraging them to vote against the committee's proposed slate of directors.
The annual shareholder meeting is scheduled for May 15.