Hedge funds call for break-up of Stork

Centaurus Capital and Paulson, two hedge funds, have issued an open letter to shareholders in Stork, a Dutch industrial conglomerate, calling for a break-up of the business at this week’s EGM, which it calls a “turning point for the Netherlands”.

Paulson, a US hedge fund, and Centaurus, a London-based hedge fund, which have a combined stake of approximately 32 percent in Stork, have made a second request for a break-up of the group after a failed attempt earlier in the year. Given that financial buyers passed in the earlier attempt, it is unlikely that buyout groups would be involved in any upcoming break-up of the group.

Today’s letter said: “Stork has a simple choice: to grow its Aerospace business from its current 2 percent market share level and become one of the suppliers of choice for the major aerospace companies; or to continue being a marginal player…The choice is simple: does Stork want to grow into a Dutch aerospace champion or risk being marginalized. Consolidation is taking place now and Stork can no longer sit idly on the sidelines while its competitors seize all the opportunities.”

The two firms originally issued an open letter on 7 September requesting that the management and supervisory board focus on the aerospace division and divest the prints, technical services and food systems units.

Following this, Stork scheduled an EGM for 12 October and asked the District Court of Amsterdam to investigate its suspicion that Paulson and Centaurus had violated the Disclosure of Major Holdings in Listed Companies Act 1996 by acting together before officially announcing a joint policy.

Today’s letter also criticised Stork for its ongoing legal investigation: “By threatening to initiate legal action against its major shareholders, the company is resorting to desperate tactics”.

Centaurus and Paulson forced the Stork board to look into options for a public-to-private takeover of the group in February, with ABN AMRO as financial advisor. Six potential financial buyers submitted indications of interest, with five invited to conduct due diligence, the result of which was one non-binding conditional offer.

In July, Stork announced to shareholders that it would remain as a listed entity as an offer that “would appropriately reflect the fair value and strengths of the company and that had a fair chance of a successful execution” was not “feasible”.