He said. She said. Repeat.
At what point do investors of a targeted company in a proxy battle ignore the noise from both sides out of sheer fatigue? In the activist proxy fight between Chico’s FAS Inc. and Barington Capital Group, that time just might be now.
Chico’s on Wednesday issued a statement correcting “errors” raised by Barington in a letter the latter sent to investors on Tuesday. In the Chico’s statement, the retailer said a good portion of Barington’s 1.5 percent stake — acquired in the last six months — was actually made up of derivatives that potentially could be converted to the company’s outstanding shares. It also said the activist group had “sold down its entire prior ownership position in the company’s common stock,” a point Chico’s used to contradict Barington’s claim that it is a long-term investor.
The retailer also repeated what it said before about the director nominees — and detailed yet again the key hires under chief executive officer Shelley Broader, governance enhancements and the relevancy of the qualifications of its candidates.
Barington’s letter on Tuesday was in part a reaction to the letter — and a link to a video from Chico’s ceo — that the retailer sent to its shareholders on Friday. That made it the third communication the parties issued in less than a week. Barington also took issue with Chico’s expectation that it would spend about $6 million to fight the proxy battle.
A representative from Barington said on Wednesday, “We are deeply disappointed that the Chico’s board is spending almost $6 million of the company’s resources to disseminate false and diversionary statements about us and our nominees in an apparent attempt to obfuscate the very real concerns we have outlined regarding the company’s declining financial and share price performance. We believe this is an irresponsible waste of shareholder resources and indicative of a lack of fiscal discipline at the board.”
The activist firm, which has said it was in communication with Chico’s back in March, threw down the gauntlet May 23. Since then, the parties have been waging what is turning out to be a drawn-out fight, given that the annual shareholders’ meeting isn’t until July 21. Since May 23, the parties have reached out to investors a total of nine times, either through letters to shareholders or public statements denouncing some factoid issued by the other side. That translates to an average outreach rate of 1.5 times a week.
One might argue that investors on Wednesday cheered the latest Chico’s statement, sending shares of the retailer up 3.3 percent to close at $10.56, although it was hard to tell if perhaps the company in reality benefited from the overall stock market gains following last week’s Brexit vote. Shares of Chico’s since May 23 have been in the trading range of $10.70, although investors saw the shares take a hit Friday and Monday as global markets digested the Brexit vote. The shares began showing signs of recovering some of those losses during Tuesday’s and Wednesday’s trading sessions, the same two days in which global markets seemed to shrug off the shock of last week’s U.K. vote to leave the European Economic Union.