CUBIC Poison pill adopted
not returned by press time. The investment fund manages about $41 billion.
“While we are disappointed with the board’s decision to impose a shareholder rights plan, we are pleased that the board has acknowledged its fiduciary duty to engage in good faith in pursuit of the value-maximizing outcome for Cubic and our fellow shareholders,” said Cohn. “We are fully prepared to acquire Cubic and look forward to immediate engagement with the company.”
Publicly traded since 1959, Cubic was not for sale prior to Elliott’s interest. The company’s board believes Cubic’s prospects as a standalone business are “excellent.”
“Cubic’s board is committed to creating long-term value and ensuring that our shareholders are able to realize the full potential of their investment in the company,” said David Melcher, lead independent director of Cubic. “The adoption of the rights plan is intended to provide the board with time to make informed decisions and prevent any third party from obtaining control of Cubic in a manner and at a price that are not in the best interests of Cubic’s shareholders.”
Ken Herbert, an analyst for Canaccord Genuity, said
Elliott has been “quietly and aggressively buying up stock” but has yet to make a formal offer for Cubic. The poison pill stops Elliott from accumulating more shares to gain leverage during discussions.
Cubic’s market value topped $1.81 billion, including Monday’s gains. The company posted $1.5 billion in revenue last year and employs 6,200 workers worldwide.
Cubic operates two distinct businesses. Transportation Services makes back-office fare collection and customer management technologies for some of the world’s largest mass transit agencies, including in London, Sydney, New York, Boston and San Francisco.
Mission and Performance Solutions provides game-based training for service memebers and pilots, as well as supplying an array of satellite and drone communications technologies for field operations, surveillance and intelligence gathering.
The company has a $3.7 billion pipeline of orders in backlog. Transportation Services accounts for 57 percent of the company’s revenue and a significant portion of the backlog.
In the short term, investors have expressed concern that municipal budget shortfalls could stall some public transit upgrades, which has weighed on Cubic’s share price, said Herbert. But in the long run, Cubic’s technology footprint and relationships with big urban transit agencies are likely to position the company well as transportation continues to evolve, he said.
Cubic revealed Elliott’s interest before markets opened. The stock gained $15.19 on Monday to close at $59.56 on the New York Stock Exchange.
mike.freeman@sduniontribune.com Twitter: @Techdiego
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