Investors Crescendo Partners own about 10% of CHC and is leading the anti-merger group, which calls itself The Computer Horizons Full Value Committee.
The Committee hired independent advisor Institutional Shareholder Services to weigh in on the merger, and ISS stated in its report that the proposed merger would give the company better scale, but would also dilute [CHC] shareholder ownership of the core drivers of growth and interfere with the company’s plan to focus on solutions as a source of revenue.
In its recommendation against the merger, ISS said, we do not believe that this transaction adequately compensates shareholders for the short-term dilution and risks.
But in a letter to shareholders earlier this month, CHC criticized the anti-merger group as short-term speculators and hedge fund operators who acquired most of their stake in CHC after the merger was announced in April. The company warned that the group was looking to make a quick gain at shareholders’ expense.
In a statement yesterday, CHC highlighted ISS’ finding that the merger would provide the scale necessary to compete in the IT provider market, but said it ultimately disagreed with the reports’ final recommendation.
CHC said the ISS report overlooks the fact that the merger is mostly a strategic move, not just a financial transaction. CHC added that the report, which was aimed at the company’s institutional clients, is unlikely to change many votes, since they are free to decide on the merger for themselves.
