Activist investor Ramius hounds A. Schulman

Ramius Capital Group LLC on Thursday followed up on the activist effort of another investor and launched a proxy contest to nominate four candidates to the board of paint and plastics company A. Schulman Inc. The New York-based activist investor argues in a letter to investors that A. Schulman violated its settlement and commitment to another activist investor, Barington Capital Group LP.
The Akron, Ohio-based company announced on Nov. 16 that it formed a special committee to consider strategic alternatives such as a sale. A. Schulman also announced that its chief executive, Terry Haines, was stepping down.
After launching proxy contests to elect directors to A. Schulman’s board in both 2005 and 2006, Barington settled with the company by adding either candidates put forward by themselves or agreeing with company directors and executives to bring on other independent directors. In 2006, Barington chief executive James Mitarotonda, a member of A. Schulman’s board, became a member of a special committee with other independent directors to follow through on a business plan that would cut costs and seek to improve the long-term prospects of the business. Mitarotonda and other directors on the special committee are involved in the selection process for the company’s new CEO. The new CEO has been chosen, but his or her name hasn’t been disclosed yet, according to Ramius’ filing.
But after A. Schulman’s announcement in November, Ramius, a 7.4% shareholder, has begun to expedite its agitation campaign. “We believe these settlement agreements are nothing more than a 'smokescreen' for management’s and the board’s failure to maximize stockholder value and have created a long history of broken promises,” Ramius partner Mark R. Mitchell stated in a letter to management. — Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.