Starboard Value reached agreement with Algonquin Power & Utilities (AQN)
Key Summary: On July 6, 2023, Starboard (5.1%) proposed a sale of Algonquin's renewable business to reduce leverage and improve EPS. On March 21, 2024, it criticized the Board's performance and nominated new directors. After reaching an agreement on April 18, 2024, to add Brett Carter and Christopher Lopez, Starboard and the company agreed on March 13, 2025, to appoint Gavin T. Molinelli to the Board, pending FERC approval, and nominate him along with Carter and Lopez for election at the 2025 Annual Meeting.
Market Cap: $3.9 billion | Algonquin Power & Utilities Corp., a renewable energy and utility company, that provides energy and water solutions and services in North America and starboard-value-reached-agreement-with-algonquin-power-utilities-aqninternationally.
- On July 6, 2023, Starboard (5.1%) delivered a letter to the company stating that a sale of the company's renewable business can help it reduce leverage and provide a safer dividend. Starboard suggests two key objectives: reducing leverage to industry-standard levels of around 5x gross leverage, with excess proceeds used for share repurchases to drive EPS growth, and improving EPS to align with peers, targeting an achievable EPS of 75 cents in FY 2025. By achieving these objectives, Algonquin can enhance its financial position, increase shareholder value, and bring its dividend payout ratio in line with industry standards. It stated that, "For example, if, following the sale of the Renewable Energy Group, Algonquin were to also sell its Water Utility and use the majority of the proceeds to repurchase shares, we believe that it could increase pro forma EPS to nearly 90 cents.
- On October 17, 2023, Starboard delivered a presentation at the 2023 Capitalize for Kids Investors Conference highlighting value creation opportunities at the company. It stated its belief that the company is opportunistic even without a sale of renewables.
- On March 21, 2024, Starboard delivered a letter to the Board outlining its concerns regarding the current Board of Directors' performance and its impact on the company's strategic direction. Despite some positive changes initiated by the company, such as a CEO change and strategic review, Starboard criticized certain board members for impeding progress and making value-destructive decisions. The letter highlighted the critical juncture Algonquin is facing, including the selection of the next CEO and the potential sale of its Renewable Energy Group. Starboard emphasized the need for fresh perspectives and shareholder-focused directors to evaluate strategic options effectively. As a result, Starboard has nominated a slate of director candidates including Brett C. Carter, Christopher Lopez, and Robert A. Schriesheim for election to the Board at the 2024 AGM. Source
- On April 18, 2024, Starboard reached an agreement with the company and pursuant to it, the Board size would increase, Brett C. Carter would join as a director, and Christopher Lopez would be nominated for election. The company also agreed to appoint New Directors to key committees and to certain voting arrangements. Starboard withdrew its director nominations and agreed to vote in accordance with the Board's recommendations.
- On March 13, 2025, Starboard Value reached an agreement with the company to appoint Gavin T. Molinelli (the "New Director") to the Board, pending approval by the Federal Energy Regulatory Commission (FERC), or an alternative nominee selected by Starboard. The company also agreed to nominate the New Director, along with Brett Carter and Christopher Lopez, for election at the 2025 Annual Meeting, with their term expiring at the 2026 Annual Meeting.
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