ClearBridge Investments Issues Letter To Board Of Directors Of Duff
& Phelps Corporation
NEW YORK, Jan. 31, 2013 /PRNewswire/ -- ClearBridge
Investments today urged the Board of Directors of Duff & Phelps
Corporation (NYSE: DUF) to negotiate in the best interests of
shareholders with respect to their offer to take the firm
private. The text of the letter from ClearBridge Investments
follows.
The Board of Directors
Duff & Phelps Corporation
c/o Noah Gottdiener
Chief Executive, President and Chairman
55 East 52nd Street
New York, NY 10055
January 24, 2013
Dear Mr.
Gottdiener,
ClearBridge Investments has been a long-term shareholder of Duff
& Phelps Corporation. We believe management has built a
high quality platform, demonstrating superior financial metrics and
discipline in the financial advisory sector, with excellent
long-term growth prospects.
During several conversations with you and CFO Pat Puzzuoli, ClearBridge has been supportive of
management's ambitions to improve operating profitability while
selectively acquiring talent and congruent businesses to grow
shareholder value.
While the company has made several acquisitions consonant with
those long-term goals, the repeated secondary placements
(approximately $270 million of equity
offerings since 2009) of stock depressed valuation consistently
below the September 2007 initial
public offering price ($16 per
share.) As a result, the December 30,
2012 announcement of the proposed acquisition, by a Carlyle
Group led consortium with participation by management, at
$15.55 per share, substantially
undervalues the business in our view.
The Board and management may be factually accurate that the
offer is at a 19.2% premium to the December
28, 2012 closing price and a 27.3% premium to volume
weighted average share price in the prior thirty days. Yet
the difficult reality is that the stock price had deteriorated for
many months and was likely depressed further by year-end tax
selling.
The offer neither exceeds the stock price highs of 2012
($16.20) let alone the peaks of 2009
in the low $20s per share. With the repeated overhang from
secondary sellers now largely complete, the stock has been poised
for a strong rebound and broader recognition by institutional
investors.
In our view, the company generates substantial free cash flows
and returns on capital which have been largely overlooked and
underappreciated by equity investors, but which will now be
captured by the private equity group. Further, the
transaction as proposed is eminently financeable and will provide
outstanding returns on capital for the non-public shareholders, to
the detriment of current Duff & Phelps public shareholders.
While we can appreciate that managing a company out of the
public marketplace may be consistent with long-term management
goals, it is the fiduciary duty of Duff & Phelps's management
and Board to negotiate in good faith and act in the best interest
of Duff's public shareholders.
We urge the Board and its advisors to exhaustively pursue all
alternatives, including a higher offer price, during the "go shop"
period which would reward the long-term shareholders of Duff &
Phelps who have endured significant underperformance and
opportunity cost over the past five years. Please be in touch
with us at your earliest convenience to discuss these issues.
Sincerely,
|
Aram
Green
|
Jeffrey
Russell, CFA
|
|
Managing
Director
|
Managing
Director
|
About ClearBridge Investments
ClearBridge Investments is a global equity-focused manager with
approximately $57.2 billion in assets
under management, as of December 31,
2012. Established in 2005 with a legacy that dates back over
45 years, ClearBridge's long-tenured portfolio managers and
fundamental research team focus on building equity portfolios for
clients who seek income solutions, high active share or low
volatility. Owned by Legg
Mason, ClearBridge operates with investment independence
from headquarters in New York and
offices in San Francisco and
Wilmington.
SOURCE Legg Mason, Inc.