The board of directors of Milwaukee-based Sensient Technologies Corp. is defying an attempt by a hedge fund to nominate four people to serve on the board at the company’s next annual meeting of shareholders.
The board has received a letter from FrontFour Master Fund Ltd., a Greenwich, Conn.-based hedge fund formed under the laws of the Cayman Islands, expressing its intention to nominate four people to serve on the Sensient board. Sensient has not announced the date of the 2014 annual meeting.
Since Dec. 31, 2013, FrontFour and its affiliates have acquired control over additional shares and currently appear to control approximately 1.5 percent of Sensient’s outstanding shares of common stock.
“In the event FrontFour were to file a proxy statement in support of its proposed slate of directors, the Board of Directors of Sensient Technologies Corporation would strongly oppose FrontFour’s four director candidates,” the Sensient board said in a statement. “FrontFour is plainly seeking to exploit Sensient’s strong financial position and industry-leading businesses for short-term gains that are not in the long-term interests of Sensient’s shareholders and other stakeholders. FrontFour’s stated plans would be disruptive and would imperil the continued successful implementation of Sensient’s strategy. Furthermore, FrontFour’s opinion that the company’s capital structure is sub-optimal is incorrect, as it completely ignores the clear benefits of Sensient’s very strong balance sheet and credit profile.”
An unduly large stock buyback or the sale of one or more business units at this time would create uncertainty and a lack of financial flexibility as Sensient continues to invest in its businesses, according to the board. Any such event would create an enormous obstacle to the continued implementation of the company’s strategy, the board stated.
“Additionally, based upon a preliminary analysis, FrontFour’s nominees for Sensient’s Board of Directors appear to be career activists with very close relationships to FrontFour, spotty track records on creating shareholder value, questionable motives and little to no experience in the very Flavors and Fragrances business they are allegedly aiming to ‘fix.’ Furthermore, their attributes, skills and experience pale in comparison to those of Sensient’s current board of directors and potential future directors that have been and will continue to be vetted by Sensient’s Nominating and Corporate Governance Committee,” the board stated.
