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Specialty Chemicals

Gloves are off in Ashland investor dispute

Cruiser Capital wants to get its four nominees on Ashland’s board

by Alexander H. Tullo
January 9, 2019 | APPEARED IN VOLUME 97, ISSUE 2

The chemical maker Ashland and the activist hedge fund Cruiser Capital are headed for a showdown at Ashland’s annual meeting next month.

Cruiser, which has a 2.5% stake in Ashland valued at around $110 million, wants to get a slate of four directors on Ashland’s board at the meeting. They include Bill Joyce, who is the former CEO of Union Carbide, Nalco, and Hercules, the latter of which Ashland purchased in 2008. Additionally, Cruiser is nominating former Hercules finance chief Allen Spizzo, ex-Innocor CEO Carol S. Eicher, and former Dow Chemical executive Pat Gottschalk.

In a letter to Ashland shareholders, Cruiser says the firm’s current board and its CEO, William A. Wulfsohn, have been racking up board fees while the company underperforms the stock market. Ashland shares ought to trade at $125 per share, Cruiser says, but instead trade at less than $75.

“There has been a lack of urgency to streamline and grow the core business,” Cruiser says in the letter. “Management and the board have demonstrated a lack of ownership mentality at Ashland.” Joyce and Spizzo, Cruiser says, have “specific ideas on how to grow Ashland’s profitability without necessarily cutting jobs.”

In its own letter to shareholders, Ashland disparages Cruiser as “a small hedge fund” and recommends that shareholders don’t vote for Cruiser’s nominees. “Ashland has a track record of adding individuals recommended by shareholders when those individuals are additive to the skills and expertise of the existing board members,” Ashland says. “None of Cruiser’s four nominees met that requirement.”

Ashland also takes a swipe at Joyce. “One of Cruiser’s nominees is 83 years old,” the letter says, “more than a decade older than the board’s mandatory retirement age.”

Ashland isn’t sitting still in the face of shareholder pressure. The firm recently inked an agreement to sell its composites business and a butanediol plant to Ineos. Additionally, it has nominated Hexion CEO, and former Hercules chief, Craig Rogerson to the board.

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