ValueVision, the Internet and television shopping network, has rebuffed demands from the activist investor the Clinton Group to overhaul its board, saying that the investor has no legal basis to make those demands.
In a letter sent to the Clinton Group on Friday, the board of ValueVision pushed aside a threat by the hedge fund to mount a proxy battle, indicating that it would be open to suggestions of change but only on its own terms.
The Clinton Group has been agitating for change at the top for more than two weeks, first calling for the chief executive and several board members to step down and then later demanding that the chairman and most of the board step down. Last week, the hedge fund applied more pressure to the board, disclosing that it had joined forces with Cannell Capital, a hedge fund based in San Francisco, to undertake a proxy battle for control of the company.
ValueVision, which sells watches, jewelry and appliances through infomercials, has lagged behind its peers, the Home Shopping Network and QVC, for several years. The Clinton Group wants to give it a makeover and has proposed a list of prominent candidates to help, including Thomas D. Mottola, the former chairman and chief executive of Sony Music Entertainment, and Thomas D. Beers, the chief executive of FremantleMedia, which produces “American Idol†and “The X Factor.â€
But on Friday, ValueVision, which is based in Eden Prairie, Minn., fought back and threw cold water on the Clinton Group’s proposals.
“Following a careful review of these materials, we have determined that neither the demand letter nor the proposals and nominations letter satisfy†the requirements outlined in ValueVision’s bylaws and the Minnesota Business Corporation Act, the company said in its letter to the Clinton Group.
The two hedge funds â€" which together hold about 10.7 percent of the company’s stock â€" do not have enough shares to meet the threshold requirement of 25 percent to mount a proxy war, according to the Minnesota Business Corporation Act.
ValueVision said it planned to hold its own special meeting of shareholders and announced that it had formed a committee of independent directors to oversee an “accelerated board candidate evaluation process.â€
The company said that it would be “receptive to listening to and considering the views of its shareholders†and adding new and qualified independent directors, but that the current dispute with Clinton Group was “not in the best interests of ValueVision for its shareholders,†citing the need for the management to focus on the holiday season.
The battle between the hedge fund and senior executives heated up last week after the company responded to the Clinton Group for the first time, asking the investor to hold off on its campaign to shake things up until after the holiday season so that executives could remain “laser focused†during the critical period.
The Clinton Group quickly fired back a letter accusing ValueVision of “surreptitiously†seeking to push off a special meeting for shareholders to consider the hedge fund’s proposals.
Shares of ValueVision fell 1.1 percent, to $5.23, during morning trading.
Jeffries is acting as a financial adviser to ValueVision, while Simpson Thacher & Bartlett and Barns & Thornburg are acting as legal advisers.
