GameStop denounces ‘useless’ attempt by activist investors to change board of directors
After last friday the scathing criticisms of hedge funds who hold a 7.2% stake in the company, GameStop (NYSE: GME) fired back yesterday with a letter to shareholders lambasting activist investors. The press release claims the proxy struggle is “based on unsubstantiated allegations and a misrepresentation of the facts” and reduces shareholder value by interfering with the operations of the company.
Referring to Hestia Capital Partners and the Permit Capital Enterprise Fund as the “dissident shareholders,” GameStop has launched a hot counter-dossier against activists’ attempts to install two members of their choice on GameStop’s board of directors. The company noted that the two appointees are inexperienced and unqualified, saying their presence on the board “would jeopardize the board’s ability to continue to execute its business transformation plan.”
GameStop went on to say that the two independent directors who would be moved by the newcomers are an asset to the company and removing them would rob the company of their knowledge and insight.
One of the new board candidates, Kurtis Wolf, is the founder of Hestia Capital Partners. GameStop argued that Wolf had no previous experience in the video game industry or even retail in general, and that “the activists’ motivations are clear: a vote for dissenting shareholders is a vote for the portfolio of Mr. Wolf to the detriment of ALL shareholders “.
Today, activist investors refuted GameStop’s line, as each side tries to win shareholder ballots in the next proxy vote. The statement argues the falsity of “GameStop’s claim that the investor group is focused on short-term financial engineering” and that the current board has taken various steps to “mislead shareholders on its performance “.
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