Battle erupts in Adaptec boardroom
Hostile investor wants it sold
There are also signs that the recession is bottoming out and it appears that Steel Partners scents another opportunity to make a profit on its Adaptec investment; the smouldering boardroom feud looks like it is about to flare up again.
The six legacy board members - Jon Castor, Joe Kennedy, Bob Loarie, Lawrence Ruisi, Doug Houweling, and Sundaresh - met on their own around early September, and voted Howard out of his board chairman position, replacing him with Kennedy. They stated that they wanted to reduce the board to just seven seats, implicitly reducing the influence and power of Steel Partners.
Steel Partners responded by moving for a shareholder vote to also reduce the board to seven positions by ejecting Sundaresh and Bob Loarie. This is open warfare in board terms. The ousted chairman, Jack Howard, told Reuters in an interview that shareholder interests would best be served by selling Adaptec and releasing the value of the assets it owns, including 400 patents. He said that Sundaresh did not have a business plan that created a path to growth, thus dismissing the data conditioning idea.
Steel Partners also contends that the legacy board members and Sundaresh are planning a $100m plus acquisition. This has been denied by Doug Houweling, chair of the board's governance and nominating committee, in a letter to Lichtenstein. The letter described Steel Partner's proposals as hostile.
The Adaptec board, through this committee, sent a letter to shareholders. It said they should not consent to the Steel Partners' ideas as they were not in the best interests of Adaptec, and meant Steel Partners would gain control of the company
Although Steel Partners is pushing hard it only controls 11 per cent of Adaptec shares and so has to get a majority of the shareholders and their holdings on its side. It has to convince them that the legacy board, Sundaresh and his team have a rubbish plan for Adaptec and a crap history of running the company. The other directors have to say it was previous management that did the original damage, that Sundaresh is doing the right things - such as concentrating all of Adaptec on the core controller business - and that the recession has affected every company's results and not just Adaptec. Their message is 'have faith and things will improve'.
There are no signs yet of which way the shareholders will vote. But if Steel Partners has its way, Adaptec is for sale. ®