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Strategies & Market Trends : Speculating in Takeover Targets
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To: richardred who wrote (2015)3/22/2008 10:52:22 AM
From: richardred  Read Replies (1) of 6101
 
Schulman hires help for strategy

UBS Investment Bank to aid in looking at sale, merger, boosting stock

By Jim Mackinnon
Beacon Journal business writer

Published on Tuesday, Mar 18, 2008

A. Schulman Inc. has hired UBS Investment Bank to help decide whether to put the Fairlawn polymer company up for sale, merge with another firm or to make a major acquisition.

Schulman, a $1.8 billion-a-year plastics compounder and resin maker, on Monday said UBS will act as its strategic financial advisor.

''This is the latest step in the ongoing process of evaluating all alternatives available to the company to maximize stockholder value,'' Joseph M. Gingo, chairman, president and chief executive officer, said in a prepared statement. ''We will also continue to move ahead with our operational initiatives to transform our business and position A. Schulman for long-term, profitable growth.''

The announcement is part of a plan pushed by dissident shareholders and hedge funds to improve A. Schulman's profitability and boost its stock price.

Gingo, a former top Goodyear executive and Schulman director, was hired effective Jan. 1 to run the company. His predecessor, long-time CEO and Chairman Terry Haines, retired as part of an agreement with shareholder Jim Mitarotonda, a Schulman director and hedge fund manager who owns a significant amount of shares. As part of that agreement, the company agreed to explore strategic options, including putting A.

Schulman up for sale.

Another significant shareholder, hedge fund Ramius Capital Group, has been pressuring company management to make changes, including exploring a sale, to increase the stock price. The fund waged a successful proxy contest earlier this year to elect two of its nominees to the Schulman board.

Shares of Schulman fell 30 cents to $19.75 on Monday. Shares are down 7.7 percent since Jan. 1, including reinvested dividends, and are down 2.6 percent from a year ago.

Shortly after becoming CEO, Gingo announced a 100-day plan to improve Schulman's performance.

The plan calls for more efficient North American manufacturing, including potential restructuring; more focus on Schulman's ''polybatch'' and engineered compounds segments; the reassessment of North American automotive operations; suspension of capital expenditures on its new multilayer plastic ''Invision'' sheet product until it gets a better marketing strategy; changes in European sales and administrative operations, and the examination of Schulman's leadership team.

As part of that, the company in February announced it will close a factory in St. Thomas, Ontario, and sell its Orange, Texas, facility to consolidate production and exit low-margin businesses.

The moves are expected to save $6 million to $7 million in fiscal 2009 and an estimated $9 million to $10 million annually in fiscal 2010.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.

A. Schulman Inc. has hired UBS Investment Bank to help decide whether to put the Fairlawn polymer company up for sale, merge with another firm or to make a major acquisition.

Schulman, a $1.8 billion-a-year plastics compounder and resin maker, on Monday said UBS will act as its strategic financial advisor.

''This is the latest step in the ongoing process of evaluating all alternatives available to the company to maximize stockholder value,'' Joseph M. Gingo, chairman, president and chief executive officer, said in a prepared statement. ''We will also continue to move ahead with our operational initiatives to transform our business and position A. Schulman for long-term, profitable growth.''

The announcement is part of a plan pushed by dissident shareholders and hedge funds to improve A. Schulman's profitability and boost its stock price.

Gingo, a former top Goodyear executive and Schulman director, was hired effective Jan. 1 to run the company. His predecessor, long-time CEO and Chairman Terry Haines, retired as part of an agreement with shareholder Jim Mitarotonda, a Schulman director and hedge fund manager who owns a significant amount of shares. As part of that agreement, the company agreed to explore strategic options, including putting A.

Schulman up for sale.

Another significant shareholder, hedge fund Ramius Capital Group, has been pressuring company management to make changes, including exploring a sale, to increase the stock price. The fund waged a successful proxy contest earlier this year to elect two of its nominees to the Schulman board.

Shares of Schulman fell 30 cents to $19.75 on Monday. Shares are down 7.7 percent since Jan. 1, including reinvested dividends, and are down 2.6 percent from a year ago.

Shortly after becoming CEO, Gingo announced a 100-day plan to improve Schulman's performance.

The plan calls for more efficient North American manufacturing, including potential restructuring; more focus on Schulman's ''polybatch'' and engineered compounds segments; the reassessment of North American automotive operations; suspension of capital expenditures on its new multilayer plastic ''Invision'' sheet product until it gets a better marketing strategy; changes in European sales and administrative operations, and the examination of Schulman's leadership team.

As part of that, the company in February announced it will close a factory in St. Thomas, Ontario, and sell its Orange, Texas, facility to consolidate production and exit low-margin businesses.

The moves are expected to save $6 million to $7 million in fiscal 2009 and an estimated $9 million to $10 million annually in fiscal 2010.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
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