With Texas Industries, Inc.’s annual meeting one month away in Dallas, the company’s third-largest shareholder (representing a 10.2 percent stake), SAVF, has gained a major new supporter in its efforts to shake up the nine-member TXI board
Source: Shamrock Activist Value Fund, Burbank, Calif.; CP staff
With Texas Industries, Inc.’s annual meeting one month away in Dallas, the company’s third-largest shareholder (representing a 10.2 percent stake), SAVF, has gained a major new supporter in its efforts to shake up the nine-member TXI board. The firm proposes an opposition slate of director candidates and three resolutions, one of which would require annual election of all directors, rather than staggered three-year terms. In a Securities and Exchange Commission filing, Egyptian billionaire Nassef Sawiris, owner of 14.9 percent of TXI outstanding shares, announced his intent to vote in favor of SAVF’s three director nominees and its three shareholder proposals. Sawiris told the TXI board in a separate letter: I believe the [SAVF’s] director nominees and their three resolutions will be a catalyst for improving performance and governance at TXI and most importantly for increasing shareholder value.
Although TXI executives did not respond to SawirisÌ announcement, company Chairman Robert Rogers and CEO Mel Brekus said in late-August statement when SAVF’s intentions were made clear that they would not be discouraged by distractions from the Shamrock group.
Backed by Roy Disney, Walt Disney’s nephew, SAVF has charged that TXI, through poor oversight and bad decision making, has been underperforming compared to peer companies. We believe that Mr. SawirisÌ support is strong validation of our call for change at Texas Industries, said Dennis Johnson, CFA, managing director of Shamrock Capital Advisors, the investment advisor for SAVF. In our view, the interests of management and the board are not aligned with those of the Texas IndustriesÌ shareholders.
The Sawiris action follows a September 1 announcement by Southeastern Asset Management, Inc., which owns 9.3 percent of TXI stock and favors the SAVF nominees and proposals as well. Based on public filings, Shamrock has the support of parties representing 34.5 percent of TXI shares. The company’s number-two shareholder, Boston-based asset-management giant Fidelity, which owns about 13 percent of the stock, has yet to comment on Shamrock’s actions.
SAVF’s three independent director candidates are Marjorie Bowen, Dennis Johnson and Gary Pechota, who was president of Giant Group Ltd.’s cement operations–Keystone Cement Co. and Giant Cement Co.–in the early 1990s. He also served as president and CEO of Giant Cement Holding until December 2001, during which time he organized the sale of the company to Cementos Portland for $343 million. Prior to his time with Giant, Pechota was president and CEO for Dacotah Cement for 10 years. In addition to destaggering board appointments by requiring annual election of all directors, SAVF proposes to institute majority voting in uncontested director elections and requiring shareholder approval of all poison pill rights plans, designed to deter coercive takeover bids.