Activist Hedge Fund Takes Titan To Task

Dec 22 2005 | 5:00pm ET

Barry Rosenstein, managing partner of hedge fund Jana Partners and a well-known shareholder activist, is calling on the board of rubber and tire company Titan International either to obtain a higher price for its shareholders than the $18 being offered by One Equity Partners to buy the firm, or to justify that the $18 price tag is indeed the best it can get. He is also questioning the "uncomfortably close connection" between One Equity and Titan's board, with one of One Equity's officers serving on the board of Titan.

In a letter sent to Titan's board last Friday, Rosenstein wrote, "The failure of the board thus far to explain their reasoning or to provide assurances that they have and will continue to make every effort to pursue the highest possible price for shareholders…eans that we will continue to oppose this transaction at the current price." Maurice Taylor, chairman and ceo of Titan, said he understood Rosenstein's concerns, but that they don't reflect the current market situation. "He thinks that our company is going to be worth a lot of money a few years down the road, and I agree with him, but you are dealing with a stock market," he said. "As I said to Barry, 'Barry, it's been going on over two-and-a-half months now. Everyone in the world knows this and there is only one offer. I wish it was 50 bucks, but there's only one offer.'"

Rosenstein stated in his letter that he and Jana Partners —Titan's largest shareholder with beneficial ownership of 14.8% of the company's stock —believe that the price being offered does not reflect the true value of the firm, which is in negotiations to purchase Goodyear Tire and Rubber North American's agricultural tires business.

Taylor has responded to Rosenstein's concerns in a letter filed with the Securities and Exchange Commission. In the letter he writes, "It's very interesting how you state there should be more information on the Goodyear [agricultural tires business] acquisition and what it means to Titan. Goodyear has stated this business was a challenge to their earnings. We negotiated a union agreement but have not been able to look at what synergy we are able to generate at this time." He added that any financial assumptions to the pro forma number at this time would simply be "guesswork".

Titan's shares were at $17.44 as of Thursday's close.


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