Marel shareholder criticizes company’s governance following failed takeover bid

Marel shareholder Teleios Capital Partners has sent a letter to the board of directors of the Iceland-headquartered processing-equipment manufacturer expressing concern about the leadership of the company following a failed takeover offer from JBT Corporation.

JBT submitted a non-binding initial proposal to the board of Marel on 24 November, which the board ultimately declined on the grounds that it was too low of an offer based on the current value of Marel. In its letter to the board, Teleios acknowledged rejecting the offer – which it said was EUR 3.15 (USD 3.42) per share – was the right decision, but added that it is “concerned that the board still lacks clarity around Marel’s future ownership.”

Teleios, which owns a 3.3. percent stake in Marel, heavily criticized the leadership in the company in its letter, and alleged the takeover offer was fraught with conflicts of interest. 

“It has long been clear to us that Marel’s international potential has been stifled by a beleaguered ownership structure and system of governance that do not befit an enterprise of its size and pedigree,” Teleios said.

The letter goes on to detail a “stagnant dialogue” between Teleios and Marel, on topic such as a “lack of adequate leadership,” failures by the board to fulfill its fiduciary duty, and a lack of safeguards between it and what Teleios called a conflict of interest with former Marel CEO Arni Oddur Thordarson, who was, according to Teleios, “recently deposed” from his role.

The company that backed JBT’s takeover bid via an irrevocable undertaking – Marel’s largest shareholder Eyir Invest, which owns 24.7 percent of shares in the company – is a holding company that was up until this year under the control of Thordarson and his father, Thordur Magnusson, Teleios said. 

“Imprudent stewardship and financial decision-making during their tenure left Eyrir teetering on the brink of insolvency, and it is now in the process of being restructured. Rumours suggest that a capital raise of approximately EUR 80 million [USD 87 million] is required, and that the two of them are at loggerheads with their investor partners,” Teleios wrote. “Simultaneously, both father’s and son’s ballooning leverage at a personal level has led their lending banks to repossess their shares in Eyrir, forcing them to cede their control.”

Teleios said the Thordarsons' struggles created a conflict of interest related to JBT’s takeover offer. 

“Thordarson may have felt inclined to encourage a ‘deal at any price’ in order to support Marel’s near-term share price and thus shore up his personal financial position,” Teleios said. “It is our belief that the takeover offer sought to capitalize on the current vulnerability of both Marel and Eyrir, and acquire Marel at a depressed valuation in just this way, which is why we support the board’s rejection of it.”

While Marel rejected the offer, Teleios said the company apparently failed to prepare for the risk of an opportunistic takeover attempt, which it flagged as a possibility after rumors relating to JBT’s started circulating in October 2023.

Telios said the situation has seeded substantial doubts in Marel’s current board. 

“The above track record of questionable decision-making and inaction, combined with the board’s own lack of confidence in Marel’s stock market listings as a reliable valuation proxy (as concluded from our numerous discussions with you), leave us concerned that the board may haphazardly recommend a different takeover offer in the future that undervalues the company, or alternately reject it without first pursuing a thorough, independent process to set it in proper context and assess whether a more attractive prospect exists,” Teleios said. “Marel’s shares traded at all-time lows in the weeks prior to the bid announcement, its CEO of 10 years was abruptly exited three weeks ago amidst widespread doubts as to his credibility, and its largest minority shareholder remains a source of worrying uncertainty.”

Teleios said Marel must hire international investment bank to perform an assessment of its financial status, and that it must conduct a strategic review of its operations and consider all takeover offers to fulfill its fiduciary duties.

In response to Teleios’s letter, Marel said it regularly meets with all of its shareholders and will continue to protect their best interests. 

“Marel welcomes an open dialogue with all shareholders, including Teleios. Marel has engaged with Teleios regularly since they have been a shareholder, as we do with our other investors, and we will continue to engage with them as we do with all our shareholders,” the company said.  

Photo courtesy of Marel