Shares in Marston’s PLC (LSE:MARS) rose almost 2% to 64.88p after the Financial Times flagged a US activist's attempt to reshuffle the board and increase shareholder returns.
Bradley Radoff, a Houston-based private investor who claims to own approximately 3% of the shares of the pub company, penned an open letter that was published on Tuesday, saying that he plans to vote against the reelection of all five non-executive members of the board at the upcoming annual general meeting, including chair Ken Lever.
Radoff said this followed "multiple conversations" Lever and management last year, where he "stressed the importance of initiating a capital return program", including a share buyback as the shares were trading at a more than 60% discount to net asset value.
Prelims in late November stated that "shareholder returns are expected to commence once leverage reduces below 4.0x", which Radoff lamented was too short on details.
"The fact that the company could not even be bothered to provide a timeline for this indicates the leadership’s indifference toward the subject. Marston’s operates in a mature, highly cash-generative business and owns a significant majority of its estate – shareholders in this type of a business expect some cash return."
He also criticised the board for owning a "paltry" 0.2% of the shares as a potential reason for their failing to act in shareholders' interests in his opinion.
Radoff argued the board has ignored calls to sell non-core assets to reduce debt and questioned Lever's independence, alleging undue influence from major shareholder Aberforth Partners, which he claims opposes share buybacks.
"If board members are congratulating themselves for the recent increase in the company’s share price, up over 50% in the past year, he said "the embarrassing reality" is that this was "based off a crashed price" and the shares "continues to trade at a massive discount" to the most recent NAV of £1.25 per share.
November's results, showing a second consecutive year of significant profit growth and margin expansion, helped lift the shares to their highest level since early 2022, with a new three-year peak reached last week.
** UPDATE: Radoff's representatives stressed that he was acting in his capacity as a private investor and not connected with his investment firm, Fondren. **