Issues Open Letter to Fellow Shareholders
Regarding the Need for Boardroom Change Following Years of
Underperformance
Launches
www.ABetterPathforCandC.com to Share Views with Respect
to the Company and Communicate with Stakeholders
Engine Capital LP today issued the below letter regarding its
decision to nominate two highly qualified candidates for election
to the Board of Directors of C&C Group Plc (LSE: CCR) at the
2024 Annual General Meeting.
***
Fellow Shareholders:
Engine Capital LP (together with its affiliates, “Engine” or
“we”) is a sizable long-term shareholder of C&C Group Plc
(“C&C” or the “Company”), with ownership of just under 5.0% of
the Company’s outstanding shares. We have been shareholders for
more than four years, and during that time, the Company has been a
perennial underperformer. We have witnessed succession missteps,
strategic mistakes, execution blunders, accounting adjustments due
to deficient internal controls, goodwill impairment and the
mismanagement of an enterprise resource planning implementation.
The Company has consistently disappointed operationally and
financially and has been unable to return to its higher historical
earnings profile, leading to disappointing stock performance across
every relevant period:1
Total shareholder returns over time Total
ShareholderReturn (YTD) Total ShareholderReturn (1-Year)
Total ShareholderReturn (2-Year) Total ShareholderReturn
(3-Year) Total ShareholderReturn (Sincelisted on LSE)
FTSE 250 Index
10.1
%
14.4
%
15.5
%
0.3
%
22.7
%
Peer Group Average
22.1
%
28.7
%
29.5
%
2.4
%
31.1
%
C&C Group plc
8.9
%
20.1
%
(11.0
%)
(25.4
%)
(49.5
%)
C&C Group vs. FTSE 250
(1.2
%)
5.7
%
(26.6
%)
(25.7
%)
(72.2
%)
C&C Group vs. Peer Group Average
(13.2
%)
(8.5
%)
(40.6
%)
(27.8
%)
(80.6
%)
Despite these numerous missteps, we continue to believe C&C
owns unique and strategic assets that are valuable and not properly
valued in the public market. Therefore, a month ago, we publicly
called on the Company to explore strategic alternatives to maximize
value. Following this letter, we privately approached the Board of Directors (the
“Board”) to discuss board representation. We believe it is critical
to add directors with relevant financial skillsets (such as capital
allocation, capital markets and M&A) and a shareholder mindset
to assist the Company. Unfortunately, the Board has shown
absolutely no interest in trying to resolve this matter privately
ahead of the 2024 Annual General Meeting (the “2024 Annual
Meeting”). We shared the names of several candidates with the Board
and suggested the directors interview our candidates. They never
followed up. This disappointing engagement with the Board has led
us to conclude that shareholder-driven change is urgently needed
following years of underperformance.
We believe the current directors lack a sense of urgency to
resolve the Company’s issues and maximize value for shareholders,
which is not surprising since they own a de minimis number of
shares, as the following table highlights.2
C&C Group Board Ownership Director Appointment
Date Ownership(shares) Ownership as %of outstanding
shares Open marketacquisitions? Ralph Findlay 3/1/2022
179,510
0.05
%
Yes Andrew Andrea 3/1/2024
0
0.00
%
No Vineet Bhalla 4/27/2021
15,000
0.00
%
No Jill Caseberry 2/7/2019
6,462
0.00
%
No John Gibney 10/26/2022
0
0.00
%
No Angela Bromfield 7/13/2023
0
0.00
%
No Chris Browne OBE 10/2/2023
0
0.00
%
No Sarah Newbitt 8/31/2023
0
0.00
%
No
Total
200,972
0.05
%
To help catalyze long overdue improvements at C&C, we are
seeking to elect two highly qualified director candidates at the
Company’s 2024 Annual Meeting on August 15, 2024. Unlike the
current Board, our candidates have skin in the game (both
candidates have committed to buy shares personally), an ownership
mentality and the relevant financial background to help create a
sense of urgency and focus on delivering long-term value for all
shareholders and stakeholders.
The case for change at C&C is strong. Here is a snapshot of
where C&C stands today:
- The Company’s shares have underperformed peers and the FTSE 250
Index over the one-year, two-year, and three-year periods and since
the Company’s listing on the London Stock Exchange in October
2019.
- The Company’s shares are trading at a steep discount to
relevant transaction multiples.
- The Company is not compliant with the UK Corporate Governance
Code 2018 by virtue of the roles of Chair and CEO being exercised
by the same individual.
- Most of the directors own no shares, and the Board cumulatively
owns 0.05% of the shares outstanding. Directors have no skin in the
game.
- We believe the Board in the aggregate has insufficient
financial skillsets, especially in the areas of capital allocation,
capital markets and M&A.
- The Company’s underlying business segments are not achieving
their potential.
- With the recent appointment of Ralph Findlay, C&C has now
had four CEOs in less than four years, with the prospect of a fifth
chief executive in 12 to 18 months.
THE STATUS QUO CANNOT
PERSIST IN THE BOARDROOM – SHAREHOLDER-DRIVEN CHANGE IS NEEDED
NOW
Given this background, we believe shareholders would be well
served by electing our two highly qualified candidates.
Shareholders don’t have to choose between our candidates or the
Company’s candidates. Shareholders can simply elect our two
candidates in addition to the eight candidates presented by the
Company and appoint 10 individuals to the Board. Our directors are
committed to entering the boardroom with an open mind, a sense of
urgency and a focus on creating long-term shareholder value. As a
large shareholder, our incentives are aligned with yours. Our goal
is to enable the Company to finally maximize value for its owners.
With the election of our two highly qualified directors, I believe
we can do just that.
Our highly qualified nominees include:
Ryan Dubin
Mr. Dubin is a representative of the nominating shareholder,
an investor and a former investment banker with over a decade of
relevant experience in finance, capital allocation, capital markets
and M&A.
Ryan Dubin is an investment professional and former investment
banker with over a decade of experience working with management
teams and company boards to maximize value. Mr. Dubin is an
investor at Engine Capital Management, a top C&C shareholder
and value-oriented special situations fund with a track record of
helping companies implement value-enhancing initiatives, including
M&A transactions, operational and cost improvements, and
optimization of capital allocation policies. Mr. Dubin has been at
Engine Capital since 2020. His responsibilities include sourcing
and evaluating investment opportunities as well as monitoring
portfolio risk and position sizing. Prior to joining Engine
Capital, Mr. Dubin spent his career in investment banking, where he
focused on helping companies unlock value through M&A,
restructuring and capital market transactions across multiple
industries at both Perella Weinberg Partners and Deutsche Bank. Mr.
Dubin received a Bachelor of Science in Accounting from The
Pennsylvania State University.
Alan Hibben
Mr. Hibben is a corporate director with a strong track record
of value creation. He has decades of experience as a former
investment banker and private equity executive with significant
expertise in capital allocation, corporate governance and
M&A.
Alan Hibben is a former Managing Director in the Mergers and
Acquisitions Group of RBC Capital Markets. Mr. Hibben also
previously held the position of Head, Strategy & Development at
RBC Financial Group. In this role, he was responsible for corporate
strategy as well as M&A and development activities for the
bank. Mr. Hibben was also Chief Executive Officer of RBC Capital
Partners, the private equity investment arm of RBC Financial Group.
Since December 2014, Mr. Hibben has been an advisor to governments
and to several large public and private companies on strategic and
other matters. Through his advisory and investment company,
Shakerhill Partners Ltd., Mr. Hibben provides financial and
strategic advisory services, as well as expert witness services.
Mr. Hibben is currently a director of Mattr Corp. (TSX: MATR)
(formerly Shawcor Ltd.). Previously, he was Chair of Home Capital
Group (TSX: HCG) and HudBay Minerals Inc. (TSX and NYSE: HBM) and a
director of Extendicare Inc. (TSX: EXE), Wild Brain Inc. (TSX:
WILD) and the Mount Sinai Hospital Foundation. Mr. Hibben received
his B.Com. from the University of Toronto. He is qualified as a
Canadian CPA and holds the CFA designation. He is an Institute
Certified Director (ICD.D) of the Institute of Corporate
Directors.
Thank you in advance for your consideration of our director
candidates. We look forward to engaging with you in the next couple
of weeks regarding the opportunity we collectively have to set
C&C on a better path at this year’s Annual Meeting.
Sincerely,
Arnaud Ajdler Managing Partner Engine Capital LP
***
About Engine Capital
Engine Capital LP is a value-oriented special situations fund
that invests both actively and passively in companies undergoing
change.
1 Total shareholder return data includes dividends and runs
through July 26, 2024. Total shareholder return since LSE listing
as of October 8, 2019, which represents the first day C&C
shares were publicly listed on LSE. Peer group is per the Company’s
2024 annual report. 2 Data per 2024 annual report and RNS
filings.
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