By Dustin Walsh, Crain's Detroit Business
Detroit, Michigan - In the midst of a proxy fight with dissident investors, US supplier Lear Corp. announced an agreement with shareholders Marcato Capital Management LLC and Oskie Capital Management LLC to expand a stock buyback and keep the hedge funds' nominees off Lear's board.
Under the deal, the seating and electronic supplier, which counts Europe as its top sales market, will further accelerate its current $1 billion share repurchase program, buying back $800 million in stock over the next 12 months and starting a new $750 million share repurchase program over three years following the completion of the current plan.
In a phone interview with Crain's Detroit Business, Lear CEO Matt Simoncini said the compromise was fair and the accelerated and new repurchase program still leaves enough cash for acquisitions and other events.
"The one thing we [Marcato, Oskie and Lear] have in common is that we are all focused on shareholder value," Simoncini said. "We may have had different views on size and pace, but this is a nice compromise."
The agreement comes only a few weeks after Lear and the hedge funds engaged in a proxy fight over board nominees. Marcato filed with the US Security and Exchange Commission to seat its founder Mick Maguire, Oskie founder David Markowitz and Enrico Digirolama, senior vice president at Allstate Insurance and former CFO at General Motors. Lear sought to reinstate its board.
Under the agreement, Marcato and Oskie have withdrawn their nominees for Lear's board, but the supplier will expand to a nine-member board with a "mutually acceptable" director, the company said in a news release.