Emancipating Captaris?

Information delivery services company Captaris Inc. is probably not that excited about the information that was delivered to them by Emancipation Capital LP on Thursday.

The New York-based activist fund reported in a Securities and Exchange Commission filing that the company should form an independent committee to explore “strategic alternatives,” to improve share value. Those are often code words that mean: find a buyer or issue a special dividend.

“In the ordinary course of their investment business, from time to time, representatives of [Emancipation Capital] engage in discussions with the management of companies in which they have invested concerning the business and operations of such companies and
potential approaches to maximizing shareholder value,” the activists wrote in a filing.

Emancipation Capital reported owning a 5.1% stake in Captaris, which has a $91 million stock market capitalization. In addition to information delivery services, Captaris manages documents electronically and develops software products. -- Ron Orol

Seidman to Massbank: Learn Who You Are Dealing With

Thrift-specialist, activist hedge fund manager Lawrence Seidman wants Massbank Corp.’s President and chief executive to know exactly who he is.

Seidman, who has engaged management and launched successful proxy contests at several thrifts through his Seidman and Associates LLC fund, wrote a letter Wednesday to Massbank CEO Gerard H. Brandi explaining that the two should have a conversation about his past endeavors.

In late December, Seidman launched a proxy contest to nominate three candidates, including himself, to the company board.

According to a letter attached to a Securities and Exchange Commission filing on Wednesday, Seidman said he was under the impression that Brandi wanted to investigate his previous activist efforts. In response, Seidman wrote that Brandi simply should give him a call and he would receive the names of directors of all the boards he has served on.

“Since you have a desire to investigate me, if you or your counsel contact me, I will provide you with the names of directors at every financial institution where I was a member of the Board, or had a representative on the Board, so you can contact these individuals, who have direct knowledge about me and my interaction with other financial institutions,” Seidman wrote.

And Seidman appears to be angling for some sort of settlement with Massbank. In the letter he points out that “nobody profits from a proxy contest other than the consultants.” Perhaps Massbank will take Seidman up on his offer and strike a deal to put him on the board. In exchange, perhaps Seidman would drop his proxy contest.

Reading, Mass-based Massbank has a $154 million stock market capitalization. Seidman and Associates holds a 7.4% Massbank stake. -- 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.

Fashion Activism with Barington Capital vs. Dillards

Jim Mitarotonda is staying true to form with a new activist campaign launched at Dillard’s Inc., a large fashion apparel and home furnishings retailer.

Mitarotonda’s Barington Capital Group LP and another activist investor, Clinton Group, reported in a government regulatory filing that they own 5.3% of Little Rock, Ark.-based Dillards, and they are recommending operational and strategic improvements, such as eliminating its duel-class stock structure, evaluating its senior management team and shuffling the company’s real estate portfolio by closing underperforming properties.

Barington’s effort at Dillard’s follows up on the activist’s campaigns at other fashion apparel companies, including Syms Corp., Payless Shoes and Speedo swimwear and Calivin Klein under and jeans maker Warnaco Group Inc. For Mitarotonda, who got his start in the New York fashion scene with a job at fashion trendsetter Bloomingdale's in New York in the early 1980s, fashion activism is par for the course.

The activist funds also would like to see the company complete a sale-lease back of owned properties, a typical tactic considered by activist investors seeking to have corporations raise capital for other purposes such as stock buybacks or special dividends.

Barington and his group sent two letters to Dillard’s board, in August and a follow up letter on Jan. 29, according to the filing. “The disappointing financial performance of Dillard’s must be addressed,” Barington wrote. “While we acknowledge that the market conditions in the department store sector have been challenging over the past few quarters due to concerns with a weakening U.S. economy, the magnitude of Dillard’s recent weak results cannot be attributed to the economy alone.”

The activist group says in the filing that it is “committed to taking all actions necessary,” which for Barington, in the past, has at times included launching proxy contests to replace directors.

Barington and Clinton Group have launched activist efforts at the same company in the past. After Barington launched an insurgency at Steven Madden Ltd., Clinton Group followed up with its own activist effort there. -- 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.

Syms: To Go Private or Not to Go Private

Two activist investors on Tuesday stepped up their campaign to have Syms Corp., a New York discount clothing retailer, reconsider its decision to delist from the New York Stock Exchange. According to a statement, Barington Capital Group and Esopus Creek Advisors, who together own 9.8% of Syms, filed a lawsuit in the Superior Court of the State of New Jersey, alleging that Syms directors broke their fiduciary duty to investors by enabling the company to delist. The activist group also is demanding a copy of the company’s shareholder list.

Syms delisted from the NYSE on Jan. 14 and is seeking to deregister its shares on April 1. Barington Capital Group and Esopus Creek Advisors sent a letter to Syms’ board earlier this month expressing their displeasure with the company’s decision to deregister. “The group believes that such actions will destroy shareholder value,” Barington and Esopus Creek wrote in the letter that was attached to a Schedule 13D filing with the Securities and Exchange Commission.
In its statement, Syms argues that investors will be able to buy and sell stock on the pink sheets, maintaining a sufficient level of liquidity and the deregistration will save the company $750,000. "The company estimates that the savings in both direct and indirect costs associated with deregistration will be substantial on an ongoing basis and that the direct recurring annual savings will exceed $750,000," Syms wrote in a Dec. 21 press release. "The company also expects that management will be able to better focus its attention and resources on continuing to improve operations and enhancing shareholder value."
But investors following the company contend that the real reason why Syms wants to deregister is to lower the value of the stock price so that management, including store founder Sy Sims, 81, could complete a management-led buyout at an inexpensive valuation leaving shareholders with lost value.
"It appears that the Syms family does not believe that their company's motto 'An educated consumer is our best customer' should apply to its investors as well," stated a large investor that requested anonymity. - 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.

Borders AND Ackman Get Together

Major activist investor Bill Ackman (pictured at left) and bookseller Borders Group Inc. have reached a compromise--for now. On Friday, the Ann Arbor, Mich.-based bookstore chain named Richard McGuire, a partner in Ackman's activist fund, Pershing Square Capital Management LP, to its board. Pershing Square has an 18% Borders stake.
Ackman's public campaign at Borders launched in 2006, when Ackman expressed at an investor conference that the company' stock price could be higher. But Pershing Square really launched its campaign when Ackman in October expressed in an SEC filing that he could consider electing a slate of directors. In the filing, Ackman indicated that he wants to shake up the executive suites and to tinker with the company's restructuring plan. At the time, he held an 11.7% stake.
Borders isn't the only retailer currently in Ackman's sites. Discount retailer Target is also facing an activist push from Pershing, but so far Ackman hasn't threatened to elect a slate of directors. Instead, he reportedly is pushing for sales of Target's credit card business and real estate. - Ron Orol

Cnet Vs. Jana Partners

In "A Loophole Lets a Foot in the Door" (Jan. 15), the New York Times' Andrew Ross Sorkin describes how CNET chief executive Neil Ashe had an hour-long conversation with activist investors at Jana Partners. According to the column, Ashe was then surprised when Jana and its group launched a proxy contest to take over the board. "They indicated to us that they were a long-only deep-value hedge fund," Ashe says, according to Sorkin. "I spent an hour with them on the phone answering questions about our business." Then, he adds: "We didn't hear anything from them again."
Sorkin uses this anecdote to explain how activist fund managers use "complex swap agreements with investment banks" to get around disclosure rules and launch surprise attacks. Is this the whole story, however? Maybe not. Regulatory filings disclose that prior to Sorkin's column, Jana Partners and its group held talks with CNET officials indicating that their activist campaign really should not have been any surprise to Ashe and probably wasn't.
In a 13D filing disclosed Jan 7, a week before Sorkin's column, Jana reported that representatives had held several calls with CNET through October, at least one of which was to discuss proposals for improving operations. The filing also says that Spark Management Partners LLC's Santo Politi, a venture capitalist and member of the Jana group, met on Dec. 6 with CNET chairman Jarl Mohn to inform him of the investment by the group, "to discuss proposals for improving the operating performance" and to request a follow-up meeting with independent board members; Ashe rejected the latter. "In a subsequent conversation, Mohn informed Politi that any discussions with members of the board would need to be coordinated by Ashe," the filing said.
Soon after, on Dec. 28, Jana delivered notice to CNET that it planned to nominate directors. These conversations demonstrate that Jana and its group actually had talks with CNET officials and aired their proposals. They also suggest that Jana didn't think everything was fine with the business. Ashe's decision to reject a meeting between CNET independent board members and the Jana group also shows that the situation wasn't exactly "friendly."
And let's get real. We're talking about Jana Partners here, a major activist hedge fund that regularly launches campaigns, not some obscure fund from under a rock. Sorkin gives the impression that Ashe was "surprised" because Jana had talked about becoming a "friendly, long-term shareholder." Any IR official or corporate executive with a heartbeat would know that Jana will launch an activist campaign if it doesn't get its way.
The issue of swaps is a matter for continuing debate, but one thing is clear from the filings: Ashe and his team were either not surprised, or shouldn't have been. - Ron Orol

CtW calls out Merrill Lynch directors

An organization that advises pensions for unions belonging to the Change to Win labor group has a new target: Merrill Lynch & Co.

The pension fund, CtW Investment Group, is calling on Merrill Lynch directors to "describe what they did to protect shareholders from excessive mortgage-related risk over the past two years."
The fund said in a statement that it plans to launch a "just vote no" campaign against Merrill Lynch's nomination committee chairwoman, should the investment bank not provide a thoughtful response to its question. (CtW would have preferred to consider urging investors to oppose members of the finance committee, but none of these members are up for election this year.)
The investment fund earlier this week took similar actions against five directors at Citigroup Inc., another bank besieged with mortgage-related problems.
Both Citigroup and Merrill Lynch have recently been the recipients of massive cash infusions (read: bailouts) from controversial state-controlled sovereign wealth funds. In December, Temasek Holdings Pte. Ltd. took a $4.4 billion minority stake in Merrill Lynch. Abu Dhabi Investment Authority reported a $7.5 billion minority stake investment in Citigroup in November. - 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.

Luby's Wins Ramius Fight, with a caveat

A battle for the future of Luby's Inc. is finally over and the cafeteria operator's management came out on top, with a small caveat.

After agreeing to a condition, Luby’s management-backed director candidates at a Tuesday annual meeting beat out nominees put forward by dissident activist hedge fund Ramius Capital Group LLC.

The activist investor group launched a proxy contest on Oct. 17 to nominate four director candidates to Luby's board at the company's annual meeting, which took place today, Jan. 15. But their success can be attributed, in part, to a decision by Luby’s largest shareholders and the operators of the business, Chris and his brother Harris Pappas, to support a measure de-staggering the 10-person board.

The dissident investors were disappointed but noted that a majority of outside investors, not including shares owned by the Pappas family, appears to have voted to back their candidates. “Although we are disappointed that our nominees were not elected to the board of Luby’s, we believe the independent shareholders of Luby's have sent a strong message,” said Ramius partner Jeffrey C. Smith in a statement. “The preliminary indications show that a majority of the independent shareholders of Luby’s voted in favor of changes to the composition of the Luby’s board. “If you exclude the Pappases’ share ownership above the 15% poison pill threshold from the vote, it appears that a majority of shares voting would have supported change to the Luby’s board of directors.”

Luby's is an Houston, Texas-based operator of 130 cafeteria-style restaurants in Texas.
A key battle focused on the capabilities of each slate’s candidates and whether the Pappas brothers should have been permitted to have an exemption from Luby's poison pill, allowing them to own up to 28% of the company's shares, instead of the 15% allowed for other shareholders.
The restaurant chain on Jan. 2 issued a proxy to investors lashing out at Ramius' nominees, criticizing them for their limited experience in the restaurant industry or how their background has "little relevance to Luby's from-scratch cooking and casual dining." One nominee, Luby's wrote, is a Ramius director "for hire," has no restaurant industry experience and was recently rejected by shareholders of another publicly traded company.
The activists have taken issue with the company's granting Christopher Pappas, Luby's president, and Harris Pappas, his brother, an exemption from Luby's poison pill. While the Pappas brothers argue that increasing their personal financial stake in the company demonstrates their commitment to making sure the company's share price improves, Ramius is concerned that the greater ownership will mean more votes for management-backed directors (and less for them) at the contentious meeting. Ramius has also criticized how, in addition to Luby's, the Pappas brothers operate a private business, which means they have less time to focus on the publicly held Luby's.
Proxy Governance, a shareholder advisory service, recommended that investors vote for three of the four candidates on the Ramius slate. -- Ron Orol

Resurgence vs. SunLink

Message from health care company Resurgence Health Group LLC to SunLink Helath Systems Inc.: the diagnosis is not good and its time to sell.

SunLink Health Systems, the Atlanta-based operator of seven community hospitals in Alabama, Georgia and Mississippi, is being pressured by shareholders that includes Resurgence Health Group to respond to a takeover offer the group had made in November.

According to a Securities and Exchange Commission filing on Monday, a shareholder group including activist investor, Berggruen Holdings North America and Resurgence Health Group, want SunLink to respond to its $7.50 a share bid to take over the company. Resurgence and its group of investors, which own 9.4% of the hospital operator, had originally made the offer to buy SunLink in November.

The group on Jan. 11 sent a letter to Howard Turner, special counsel to the special committee of SunLink’s board, seeking a response. The group said it was disappointed that SunLink did not respond to their offer by Dec. 7. Subsequently they sent another letter, according to the filing. “Our client is frustrated with the Board’s inaction with respect to the Offer and believes that such inaction evidences management’s desire to remain entrenched at the expense of SunLink’s shareholders,” Resurgence Health wrote in the letter.

Last year, according to the filing, Berggruen Holding teamed up with Resurgence and agreed to provide the financing to enable Resurgence to make the bid. The bidders also complained about SunLink’s board, noting “close personal relationships” between management and certain directors and questioning whether they are looking out for shareholder interests.

“We urge you to act not in your own self-interests or in a manner beholden to management, but instead, in the best interests of all of your shareholders by contacting us promptly and meeting with us as soon as possible,” the letter said. SunLink has a $46 million stock market capitalization. - Ron Orol

Activst Vs. Broadcasting Inc.

Social video entertainment and networking over the Internet isn’t working so well for Broadcaster Inc., a Chatsworth, Calif.-based company.

At least that’s what activist hedge fund Baytree Capital Associates LLC believes. According to letter attached to an activist Securities and Exchange Commission filing on Friday, Baytree Capital director Michael Gardner believes the company is in a “dire situation” and he charged that Broadcaster has “failed to adhere” to board directives. “The board identified one specific merger candidate with which it instructed management to execute a letter of intent,” Gardner wrote. “Management executed the letter of intent but cancelled it the following day without any explanation or notice to the board.”

Gardner also charged in the SEC filing that Broadcaster’s board directed management to cut employees from 50 to 12, but that management did not “terminate” the employees. The letter was addressed to Broadcaster Chief Operating Officer Nolan Quan. The $8 million stock market capitalization company operates broadcaster.com, an Internet entertainment network.-- Ron Orol

Activists Move a Little Closer to Change At A. Schulman

Ramius Capital Group LLC on Thursday succeeded at getting two candidates elected to the board of A. Schulman Inc., a $566 million stock market capitalization paint and plastics company that the New York-based hedge fund has been pressing to complete a strategic review that could result in a sale of the business.
The winning candidates backed by the dissident investor group, Michael Caporale and Lee Meyer, filled seats vacated by James Karman and Joseph Gingo. The latter is A. Schulman's chief executive. The dissidents had hoped to force the Akron, Ohio, company to auction to itself or consider other changes to improve stagnating shareholder value. In various government filings, the activist investors have raised concerns about the company's performance and had originally nominated four candidates for board nomination but later reduced the number to a pair they believed were experts in related areas.
Although A. Schulman's CEO was forced off the board, Ramius has indicated its intent to find a way for him to rejoin, though not as chairman or a voting member of the special committee formed to explore strategic alternatives. Gingo will become a nonvoting member of the strategic review committee, according to a Ramius spokesman. According to an Institutional Shareholder Services Inc. report issued Jan. 4, Ramius Capital suggested expanding the board by one member so he can maintain a seat.
The proxy contest followed the effort of another activist investor, James Mitarotonda's Barington Capital Group LP, who had launched proxy contests and settled with the company in the past. A. Schulman announced on Nov. 16 that it formed a committee to consider strategic alternatives such as a sale. A. Schulman also announced in November that chief executive Terry Haines was stepping down.

Activist Drilling with Warren Lichtenstein

Activist investor Warren Lichtenstein is seeing if he can drill some value out of Houston-based drilling services company Rowan Companies Inc., a company he has been publicly campaigning to achieve some change since July.

According to a Securities and Exchange Commission filing on Wednesday, Lichtenstein on Tuesday sent a letter to Rowan executives nominating three director candidates, including himself, for election to the company’s board.

Rowan has a $4.3 billion stock market capitalization. Steel Partners II LP, Lichtenstein's Aspen, Co.-based investment vehicle, has slowly been increasing its stake since publicly reporting an activist position on July 5. It reported owning a 9.1% Rowan stake on Wednesday. -- Ron Orol

MMI, Steel Partners Ratchet up Effort at Brinks

A tag team of two investors is seeking to unlock the value and vault of armored car transport company Brinks Co.

Backing the proxy contest efforts of another activist investor, Steel Partners II LP’s Warren Lichtenstein delivered a letter to Brinks board urging it to complete a tax-free spin off one of its two business segments, according to a Wednesday government filing.

Lichtenstein’s endeavor follows up on a proxy contest launched by activist Clay Lifflander to put four candidates on the Richmond, Va.-based company’s board in November. Lifflander, portfolio manager of MMI Investments LP of New York, reported owning an 8.4% stake while Steel Partners reported Dec. 31 that it owned a 6.2% of Brinks.

In the letter, Lichtenstein said Steel Partners is encouraged by Brinks recent retention of Monitor Group to assist it in considering strategic alternative, but he indicated that strategic changes such as a sale or spin off need to happen soon. He added that if no sale of a division or the whole company is forthcoming, Brinks should begin “aggressively” buying back shares, hiking its current repurchase program from $100 million to $500 million

“To the extent it is determined, based on advice from Monitor Group or otherwise, that Brinks will not pursue a tax free spin-off or other strategic alternative, we demand that Brinks pursue an immediate sale of the company in a process that maximizes value for all shareholders,” Lichtenstein wrote.

Meanwhile, MMI’s efforts are on-going. On Dec. 12, the group indicated they were supportive of the Monitor Group addition, but no indication was made to end the proxy contest.

“We believe the director slate we’ve nominated is well qualified, with a breadth and depth of business experience to maximize value for all Brinks stockholders,” Lifflander wrote in November. “We are not seeking control of the board. We simply believe that the board as currently composed has demonstrated that it lacks the security industry perspective, strategic alternatives acumen and stockholder representation necessary to protect and maximize the value of Brink’s stockholders’ investment.”

Lifflander said in his letter that he believes the armored car company lacks industry experience on its board. He is seeking to nominate John Dyson, the chairman of MCM Capital Management; Peter Michel, former chief executive of Brink's residential security monitoring unit; Robert Strang, the CEO of Investigative Management Group; and Exide Technologies director Carroll Wetzel. “Our nominees fill major gaps in the experience and skill set of the current directors, particularly as the board has limited direct Wall Street experience and no expertise in the security industry, other than chairman, CEO & president Michael Dan,” he added.

MMI Investments has been engaging Brink’s since 2003 and has lately pushed for a sale of the company. In 2005 the hedge fund began publicly agitating for Brink’s to sell its marginally profitable BAX Global subsidiary, an international heavy freight and logistics operator, which was subsequently sold for roughly $1.1 billion. - Ron Orol

More activists were circling prey in 2007

Activist investing gained steam in 2007. At least that's the conclusion reached by new data produced by FactSet Research System's SharkWatch product.
The research company reported that activist campaigns went up 17% in 2007, rising to 501 from 429 in 2006. Additionally, 138 institutional investors and other investors launched their first ever campaigns in 2007.
John Laide, product manager of FactSet SharkWatch, says that the activist campaigns considered in the study relate to any agitation for change, including proxy fights and efforts to have corporations sell divisions, complete stock buybacks or issue special dividends, among many other tactics.
Some less high-profile activist efforts are included as well. Laide added that when activist hedge funds report in government filings that they have had discussions with management about potential ideas to improve shareholder value, that effort is often included as an activist campaign.
SharkWatch tracks activist Securities and Exchange Commission filings such as Schedule 13Ds. - Ron Orol
See SharkWatch Report
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.

Costa Brava seeks answers from MedQuist

Activist investor Costa Brava Partnership III LP sent a missive to Medquist Inc. director Clement Revetti Jr. on Monday, arguing that board members have serious conflicts related to the sale of the medical billing company. The Costa Brava letter comes after Royal Philips Electronics NV on Nov. 2 said it would sell its 70% stake in MedQuist. On July 6, the Netherlands consumer electronics giant announced the Mount Laurel, N.J.-based unit was a noncore asset.
According to a regulatory filing on Monday, Costa Brava sent a letter to Revetti expressing concerns about the replacement of three independent MedQuist directors, arguing that the replacement of these individuals is a "violation of the governance agreement" that governs the relationship between Philips and MedQuist.
"The process by which Philips and its functionaries are forcing the sale of the entirety of MedQuist is illegitimate, as it is being directed by a conflicted and incomplete board," Costa Brava senior vice president Andrew Siegel said in the letter.
It comes after Costa Brava in November sought to inspect the medical billing company's shareholder list, books and other records for the past seven years. "Accordingly, this letter shall serve as a formal request on behalf of Costa Brava to inspect and copy the company's list of all shareholders and the books and records of accounts and minutes of all proceedings of shareholders, board and executive committees from January of 2000 until the present," the November letter stated. "We demand that such an inspection take place on or before Friday, Nov. 9."
MedQuist's troubles began in late 2003 when a whistleblower charged it engaged in improper billing. It was delisted from Nasdaq in June 2004 after failing to meet reporting requirements. MedQuist has hired Bear, Stearns & Co. to advise it on strategic alternatives.
Costa Brava reported having a 5.2% stake in the billing company. MedQuist, which has a $381 million stock market capitalization, provides medical transcription technology and services in the U.S. It also offers digital dictation, speech recognition, electronic signature, and medical coding technology and services. - Ron Orol
See schedule 13D filing from SEC EdgarSee TheDeal.com: MedQuist recruits Bear StearnsSee TheDeal.com: Philips bids high to buy 60% of MedQuist
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.

RLR Capital Expands Effort at 1-800 Flowers.Com

The flowers may soon bloom at 1-800 Flowers.Com, at least that’s what it looks like to an activist investor that hiked his stake in the company on Friday.

Robert L. Rosen and RLR Capital Partners LP raised their stake in the Carle Place, NY-based fresh-cut flowers retailer to 6.3% from 5.1%. The activist first reported an original Schedule 13D Securities and Exchange Commission filing on June 27. In it, RLR Capital Partners said the flower retailer’s shares were “substantially” undervalued and that the hedge fund’s managers “have had, and expect to continue to have, discussions” with the company’s management about business prospects. In a letter to 1-800 Flowers.Com executives on June 27, Rosen expressed support for the company’s strategy but also indicated that the company should “pursue” opportunities to “enhance” shareholder value.

“As your free cash flow builds over the coming months and years, you will have capital structure and allocation opportunities. We remain confident that you will continue to pursue those opportunities which will most greatly enhance shareholder value,” he wrote.

1-800 Flowers.Com has a $454 million stock market capitalization. -- Ron Orol

Activist Expands Zale effort

Securities and Exchange Commission chairman turned activist hedge fund manager didn’t get the Christmas gift he was looking for at Zale Corp. this December. Now he’s hoping Santa will make a rain-check visit in January.

Breeden, founder of mid-capitalization activist hedge fund Breeden Capital Management LLC, on Wednesday hiked his stake in Zale Corp. to 15.1% from 7.7% on Jan. 2 as part of his effort nudge the specialty jewelery retailer into considering strategic options such as auctioning off key assets.

Breeden launched a public activist effort in September, when he filed a Securities and Exchange Commission Schedule 13D detailing that he met with the Irving, Texas-based corporation’s management. In the filing, Breeden said he plans to continue discussions with executives and directors. Talks between Breeden and Zale centered on the company’s financial performance and strategic options for the jewelry company such as an auction of key assets.

Breeden’s effort also comes after Zale in December replaced CEO Mary E. “Betsey” Borton with Neal Goldberg, who will also be president.

In the spring Zale reported that it had hired investment bankers to review strategic alternatives such as selling some assets including its Bailey Banks & Biddle brand and Piercing Pagoda mail kiosks brand. In June 2006, Zale reported it had held unproductive talks to be acquired by mega-jewelry retailer Signet Group plc of London, U.K. (Signet operates the Kay and Jared jewelry chains). In a recent conference call with analysts on Aug. 30, then-Zale Chief Executive Betsy Burton said she has analyzed the viability of selling some of its assets, but she declined to elaborate. But at a Goldman Sachs retail conference on Sept. 6, Burton said Zale will consider closing some unproductive stores and divesting some brands, though no sales were imminent.

Activists ask Syms to closet delisting plan

Two activist investors on Wednesday launched a campaign to stop Syms Corp., a New York discount clothing retailer, to reconsider its decision to delist from the New York Stock Exchange.
Barington Capital Group and Esopus Creek Advisors, who together own 9.7% of Syms, sent a letter to Syms' board expressing their displeasure with the company's decision to deregister. "The group believes that such actions will destroy shareholder value," Barington and Esopus Creek wrote in the letter that was attached to a Schedule 13D filing with the Securities and Exchange Commission.
In its statement, Syms argues that investors will be able to buy and sell stock on the pink sheets, maintaining a sufficient level of liquidity and the deregistration will save the company $750,000. "The company estimates that the savings in both direct and indirect costs associated with deregistration will be substantial on an ongoing basis and that the direct recurring annual savings will exceed $750,000," Syms wrote in a Dec. 21 press release. "The company also expects that management will be able to better focus its attention and resources on continuing to improve operations and enhancing shareholder value."
But investors following the company contend that the real reason why Syms wants to deregister is to lower the value of the stock price so that management, including store founder Sy Sims, 81, could complete a management-led buyout at an inexpensive valuation leaving shareholders with lost value.
"It appears that the Syms family does not believe that their company's motto 'An educated consumer is our best customer' should apply to its investors as well," stated a large investor that requested anonymity. - Ron Orol
See Schedule 13D filing via the SEC's Edgar See press release via Yahoo! Finance
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.

Advisory firm supports Ramius' Luby campaign

The battle for the future of Luby's Inc. intensified Wednesday after shareholder advisory group Proxy Governance Inc. recommended that investors vote to support three of four dissident director candidates nominated by activist hedge fund Ramius Capital Group LLC for the cafeteria operator's 10-person board.
The activist investor group launched a proxy contest on Oct. 17 to nominate four director candidates to Luby's board at the company's annual meeting scheduled for Jan. 15. Proxy Governance also recommended to shareholders that they vote to support an investor proposal seeking to remove Luby's anti-takeover protection, classified board structure.
Luby's, an operator of 130 cafeteria-style restaurants in Texas, on Oct. 31 launched its own campaign, hoping to maintain control of the company's destiny and the support of its institutional investor base.
The restaurant chain on Wednesday issued a proxy to investors lashing out at Ramius' nominees, criticizing them for their limited experience in the restaurant industry or how their background has "little relevance to Luby's from-scratch cooking and casual dining." One nominee, Luby's wrote, is a Ramius director "for hire," has no restaurant industry experience and was recently rejected by shareholders of another publicly traded company.
The activists have taken issue with the company's granting Christopher Pappas, Luby's president, and Harris Pappas, his brother, an exemption from Luby's poison pill, allowing them to own up to 28% of the company's shares, instead of the 15% allowed for other shareholders. While the Pappas brothers argue that increasing their personal financial stake in the company demonstrates their commitment to making sure the company's share price improves, Ramius is concerned that the greater ownership will mean more votes for management-backed directors (and less for them) at the contentious meeting. Ramius has also criticized how, in addition to Luby's, the Pappas brothers operate a private business, which means they have less time to focus on the publicly held Luby's. - Ron Orol