Hedge fund Elliott raises stress on Mitek after takeover bid rejected

NEW YORK (Reuters) – Hedge fund Elliott Administration on Tuesday requested Mitek Programs Inc (MITK.O) to scrap a so-called “poison capsule” to let it purchase extra inventory and stated it might press for board modifications after the software program firm took steps to guard itself from the activist investor.

Elliott, which invests greater than $34 billion, wrote to Mitek’s board and requested for “reduction from the poison capsule just lately enacted” in an effort to purchase as a lot as 14.9 p.c of the corporate’s inventory.

Elliott has not disclosed the scale of its stake, which incorporates widespread inventory and swaps, however has stated it is among the firm’s greatest shareholders.

Mitek didn’t instantly reply to a request for remark.

Elliott is rising the stress on San Diego-based Mitek at a time when software program firm ASG Applied sciences, which the hedge fund owns, has been pushing to purchase Mitek for $10 a share. Mitek has to date rebuffed the overture.

Mitek’s share value has climbed 8.64 p.c over the previous month and was buying and selling at $9.48 on Tuesday.

Elliott wrote that ASG President and Chief Govt Charles Sansbury first approached Mitek a few attainable takeover in August, roughly one week earlier than the corporate introduced that long-serving CEO James DeBello and Chief Monetary Officer Jeff Davison could be leaving. Earlier this month, the corporate stated on its earnings name that ASG reached out “after the announcement of our govt modifications.”

Elliott stated Mitek was adopting a “path of entrenchment” and had not correctly engaged with the hedge fund.

On Oct. 31, ASG Applied sciences stated it needed to purchase Mitek for $10 a share in money, a 51 p.c premium above the inventory’s closing value on Oct. 9, 2018.

The hedge fund famous that director Bruce Hansen offered Mitek inventory at $8.66 earlier within the 12 months, which prompted it to query, in its letter, why a deal at $10 a share would undervalue the corporate. Elliott additionally stated a lot of board members have been stretched skinny by serving on too many boards.

The deadline for nominating administrators is Dec. 7. Elliott has usually requested for board seats.

ASG acquired an funding final 12 months from Evergreen Coast Capital, the non-public fairness arm of Elliott Administration. Elliott has been utilizing Evergreen to amass each private and non-private firms, and generally includes Evergreen when it pushes firms to discover a sale.

Reporting by Svea Herbst-Bayliss; Enhancing by Bernadette Baum and Dan Grebler

Author: Maxwell C.

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