Chico’s FAS Inc. has opted out of a provision of the Florida Business Corporation Act that denies voting rights to an investor if it acquires 20 percent or more of the company’s shares, unless the voting rights are approved by a majority of unaffiliated shareholders at a special meeting.
Chico’s chairman David F. Walker issued a letter to shareholders Monday that the action was geared “to ensure that all Chico’s FAS shareholders retain voting rights for each share they own.”
Walker noted that some years ago, Florida was one of a number of states to adopt a provision known as a control share acquisition statute. Being based in Fort Myers, Fla., the provision was automatically incorporated into the retailer’s bylaws.
“While we currently have no shareholder that owns 20 percent or more of the company’s shares, at Chico’s FAS, we believe that if you own any shares in our company, you should have the right to vote those shares — period,” Walker wrote. “Accordingly, the Chico’s FAS board of directors has unanimously approved an amendment to the company’s bylaws whereby the company has opted out of the control share acquisition statute under the Florida Business Corporation Act.”
The move follows last week’s letter by Sycamore Partners to Walker, requesting a special meeting of shareholders to address provision §607.0902 of the Florida Business Corporation Act. In the letter, Sycamore, which has made three unsolicited bids to purchase Chico’s, the latest being at $3 a share, also included a request seeking due diligence access to Chico’s to provide the Chico’s board and shareholders “a binding, unconditional acquisition offer for all to consider.”
Walker said the company’s action on Monday eliminated the need for a special meeting requested by Sycamore.
“To be clear, this bylaw amendment relates solely to voting rights; it does not speak to the merits of, or otherwise advance, Sycamore’s unsolicited acquisition proposal, nor does it speak to whether the company should engage with Sycamore on its proposal. As previously announced, Sycamore’s June 19, 2019 proposal is being reviewed by the board,” Walker wrote.
Goldman Sachs & Co. LLC is serving as financial advisor to Chico’s FAS, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel.
Walker also said it completed a declassification process whereby Chico’s directors will be annually elected beginning with its 2019 annual shareholder meeting.
Chico’s continues to search for a new ceo, but has Bonnie Brooks, who was already on the board, serving in the role on an interim basis.