With the support of Institutional Shareholder Services, activist investor Sun Capital Securities Group LLC may be one step closer to its goal of securing three seats on the board of Furniture Brands International Inc. and, possibly, its goal of taking over the business.
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The insurgent investor on Monday received the support of the influential investor proxy advisory firm for all three of its candidates.
In addition to its proxy contest, the activist fund had made an unsolicited bid for the furniture maker on Feb. 21.
Furniture Brands has shunned Sun Capital's advances, saying that the strategic plan it launched in the fall of 2007 is "on track, and earnings momentum is developing." A key part of that plan is to switch to an operating company model designed to generate $40 million to $50 million in annual cost savings.
The St. Louis, Mo.-based furniture-making company also points out that should Sun Capital win its contest to put its nominees on its board, these directors would have a conflict of interest because they would be "less likely to fight for value" once another bid was put on the table. - Ron Orol
See Sun Capital press release from BusinessWire
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
