Activist investor Keith Meister is rejecting an olive branch
from office-building owner Commonwealth REIT, declining a proposed
settlement aimed at ending a nearly yearlong battle over control of
the company.
Mr. Meister, head of New York hedge fund Corvex Management LP,
is saying no to Commonwealth's offer to join the board, pushing
forward with its efforts to remove the existing board.
Commonwealth's invitation to the board was part of a proposed truce
that also sought to split Mr. Meister from his ally in his fight
against Corvex, Related Cos., which is another real-estate
company.
Instead, Corvex and Related announced Thursday their own slate
of five independent nominees, setting the stage for another
contested shareholder vote for Commonwealth's board. The investors'
goal is to overturn the full board, which currently has seven
members.
Corvex and Related's Chief Executive Jeff Blau last February
started seeking to take over the board of Commonwealth and
criticized its ties to the Portnoy family, whose management
organization collects the fees to run Commonwealth.
Commonwealth has since changed the structure of the fees that it
pays management to make the setup more shareholder friendly, a key
point of contention. Last week it added two more independent board
members. The company again called the fight with Corvex and Related
an expensive distraction.
In a statement Thursday, Messrs. Meister and Blau criticized
Commonwealth's recent changes as not going far enough and said the
two new board trustees were selected by the same board the
activists had been criticizing.
Corvex and Related, which together hold about 9.6% of
Commonwealth's stock, ran a shareholder vote last summer, through a
process known as a consent solicitation, to remove the then
five-member board of Commonwealth. Though the investors said they
got 70% support, but the vote was invalidated largely on procedural
matters.
An arbitration panel ruled in November the investors could
proceed with a new vote, a blow to Commonwealth's defense tactics.
The company has made several attempts to block what it has called a
hostile takeover attempt while the activists have criticized each
attempt as unfriendly to all shareholders.
Thursday, the two investors they expect to get the same support
in this consent solicitation as they did last time.
Corvex and Related's nominees include James Corl, of
private-equity firm Siguler Guff & Co., Edward Glickman, a
professor at New York University Stern School of Business, Peter
Linneman, an emeritus professor at University of Pennsylvania's
Wharton School of Business and a principal at a real estate
advisory firm, and Jim Lozier, the founder and former CEO of Archon
Group LP a real-estate investment adviser owned by Goldman Sachs
Group Inc.
One of the nominees, Kenneth Shea, is a developer of resorts and
casinos and has worked with Carl Icahn, the activist investor for
whom Mr. Meister used to work.
Write to David Benoit at david.benoit@wsj.com
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