The publicly-traded real estate company St. Joe said earlier this week that it is going to enact a new shareholders’ rights plan to put off potential takeover plots by Fairholme Capital Management. Fairholme currently owns thirty percent of St. Joe.
The “poison pill,” to put off Fairholme is not necessary, according to Fairholme’s Bruce Berkowitz and Charlie Fernandez. “We are not activists,” they insist. They have made several attempts to gain control of the board, though.
Berkowitz and Fernandez said they wanted St. Joe to “stop wasting money.”
The new plan by St. Joe would trigger shareholders’ rights whenever any investor acquired ten percent ownership of the company. Other details are not yet available, but an 8-K filing is coming soon.
A statement from the St. Joe board says that the new shareholder rights plan is “designed to reduce the likelihood that any person or group would gain control of the company by open market accumulation or other coercive takeover tactics without paying a control premium for all shares.”
As soon as St. Joe announced its plans, Fairholme announced a plan to replace the St. Joe board through a write-in campaign among shareholders.
St. Joe’s poison pill plan would do nothing to prevent Fairholme from conducting a write-in campaign. One insider explained that the poison pill would only force Fairholme to pay a premium for taking over the company. It can’t stop them from seeking consent from other shareholders and nominating new board members.
San Diego shareholders’ rights attorneys note that it is not clear what Fairholme really wants St. Joe to do differently. The company is planning to concentrate more on commercial development, rather than developing gated communities as it has in the past. Berkowitz and Fernandez seem to hope for more commercial and industrial development than the current board is contemplating. In the current poor market, though, it is hard to see how that can be accomplished.
Source: Wall Street Journal “New Twist in Fight for Control of St. Joe” 2/16/2011