An activist shareholder with proxy fight experience is pressuring Michael Baker to put itself up for sale, saying it will nominate its own slate of directors if the Moon engineering concern fails to do so.
Crescendo Partners made the statement in a letter sent Wednesday to Baker chairman Richard L. Shaw. New York-based Crescendo owns less than 5 percent of Baker's stock, but did not disclose how many shares it owns.
The letter comes after an Alexandria, Va., private equity firm made a $24.25 per share cash offer for Baker on Dec. 19. Some analysts said DC Capital's offer was low given Baker's debt-free balance sheet and strong cash position. Crescendo senior managing director Arnaud Ajdler agreed.
In his letter, Mr. Ajdler wrote that "there is a strong possibility" Baker could be sold for more than $30 per share.
"We believe a sale of the company at this time would be the most prudent and effective way to deliver maximum value to shareholders," he wrote. "We believe that [Baker] will remain significantly undervalued as long as it remains a stand-alone public company."
A spokesman for Baker said the company will review the letter and respond in due course.
A spokesman for DC Capital also declined comment.
Mr. Ajdler is a former director of Hill International, a Marlton, N.J., construction management firm that teamed with Baker and another firm on a $1.2 billion contract awarded in 2004 to rebuild Iraq. He was also a director at Charming Shoppes as a result of a proxy fight Crescendo waged against the Bensalem, Pa., women's clothing retailer. Charming Shoppes was sold in June for about $900 million to Ascena Retail Group. After threatening a proxy fight at O'Charley's, Mr. Ajdler was appointed to the board of the Nashville, Tenn., restaurant chain in 2008. O'Charley's was sold in April to Fidelity National Corp. for about $221 million.
Mr. Ajdler is also chairman of Destination Maternity, a Philadelphia-based maternity apparel retailer.
In his letter, Mr. Ajdler said the recent departure of Baker president and CEO Bradley L. Mallory increases the risks of Baker trying to turn around its lagging performance on its own. DC Capital's offer will make it more difficult to find a new CEO because executives will be reluctant to take a job at a company that could be sold, he wrote.
The firm urged Baker to form a committee of independent directors to explore the sale of the company. Mr. Ajdler wrote that Crescendo intends to nominate its own slate of directors at Baker's shareholder meeting this spring if the company has failed to pursue a sale.
Mr. Mallory, who became CEO in February 2008, resigned suddenly Dec. 13 at the request of Baker's board. Baker shares fell more than 30 percent during his tenure.
Baker shares finished Thursday at $24.30, up 27 cents. They are up 27 percent since Mr. Mallory's resignation and 24 percent this year.
Len Boselovic: firstname.lastname@example.org or 412-263-1941. First Published December 27, 2012 10:30 AM