ABX Air’s second largest shareholder has “strongly” encouraged the company board of directors to negotiate with ASTAR Air Cargo, a business that indicated last summer it wanted to acquire ABX.
ABX rejected ASTAR’s overture in July when the seven-member ABX Air Board of Directors unanimously turned down an acquisition proposal by ASTAR as not being in the best interest of ABX stockholders.
Willem Mesdag, managing partner of Red Mountain Capital Partners LLC, recently wrote a letter to James H. Carey, ABX chairman of the board. Mesdag concludes his letter: “… we strongly encourage you to act in your shareholders’ interest by engaging in serious and constructive negotiations with Mr. Dasburg [ASTAR’s CEO] to consummate a transaction that maximizes shareholder value.”
In the first paragraph of Mesdag’s letter, he wrote, “Notwithstanding its [ABX Board of Directors] express statement to the contrary, we are not confident that the Board of ABX Air is committed to maximizing shareholder value.”
Mesdag’s questioning of the board’s commitment to maximize shareholder value is a significant statement. That’s because when it comes to purchase proposals, it is a board of directors’ fiduciary responsibility to assess what is going to offer the greatest return to the shareholders.
A copy of Mesdag’s Sept. 24 letter to the ABX board became public when it was filed this week with the U.S. Securities and Exchange Commission (SEC).
Red Mountain Capital Partners owns 3,623,154 shares of common stock. That represents about 6.2 percent of the outstanding common stock of ABX Air, according to Red Mountain Capital Partners’ filing with the SEC.
In his letter, Mesdag asserts, “… a merger with ASTAR that would consolidate DHL’s air freighter fleet in the United States presents a unique opportunity to maximize value for ABX Air’s shareholders.”
ABX and ASTAR are the two primary air carriers for DHL Express in the United States. Both ABX and ASTAR have their operational hubs at the DHL Air Park near Wilmington.
Shipping industry giant DHL Express is part owner of ASTAR, and furthermore, DHL Express is ABX’s largest customer.
Mesdag wrote, “While we agree that the terms suggested by ASTAR [last summer] do not fully reflect the value of merger synergies and ABX Air’s expanded fleet of Boeing 767s, we believe that, in light of the significant value of such a transaction to DHL, good faith negotiations with ASTAR could result in an improved offer.”
A spokeswoman for ABX Air said Wednesday afternoon any comment to the media would need to be reviewed by the board’s seven members, and thus any official comment was unlikely by presstime.
On a related topic, a Sept. 19 press release by the International Brotherhood of Teamsters said, “Two recent developments triggered concern that the takeover defenses of ABX Air may be detrimental to shareholder value. On July 24, ABX Air rejected an offer to acquire the outstanding shares of the company at a 10 percent premium to market value, without disclosing the fairness opinion of its financial advisors. On Aug. 10, ABX Air announced that it would restate earnings for 2006 and first quarter 2007.”
The International Brotherhood of Teamsters represents 690 ABX Air flight crew members.
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