Starboard Sees the Trees from the Forest (FCE)

On March 22, 2018, Starboard and Scopia reached an agreement with Forest City to a standstill provided the company appoint Starboard’s nominee as well as Scopia’s five nominees to the board of directors. The company had rejected a proposed takeover at $25/sh, allegedly by Canada-based Brookfield, earlier in the year opting instead to move forward with a new board and new capital return initiatives. Ultimately the pursuit was not over because Brookfield made a follow-up bid on April 16th, the day the new appointees started on the board. Brookfield removed stringent conditions on the transaction and in July, the new board thought Brookfield’s $25.35/sh was plenty. It was later revealed in a 223-page document filed with regulators that the board was divided on the deal, voting 7 to 5 on July 30th. CEO David LaRue was the deciding vote, who also happens to be the first chief executive who is not a descendant of the founder. LaRue was the only one to switch sides and also happens to get a $12.68M golden parachute for changing his mind. Shareholder approval is pending and Forest City hasn’t yet announced the vote date but be assured Scopia and Starboard’s 14% will be “yay” and the Ratner Family’s little 2.5% will be “nay.”


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