Change of name and move to replace chairman leads to outbreak of peace at retailer but more transparency would be welcomed
The change of name from Kesa to Darty has coincided with an outbreak of peace at the electrical retailer with a bombed-out share price. Eric Knight of activist investor Knight Vinke, owner of 25% of the shares, has been chatting to non-executive director Alan Parker behind the wide-screen tellies and liked what he heard.
Knight has dropped his formal resolution to place himself on the board and is happy to see Parker replace David Newlands as chairman immediately rather than next month. And the Parker-led board of directors will be happy for Knight to join their ranks from mid-December without having to undergo the tiresome business of seeking other shareholders’ approval. It’s all part of an “open and constructive” dialogue on strategy, apparently.
These “open” discussions, however, don’t extend to informing the other 75% of shareholders about what’s going on. Of course, it’s not hard to guess the item at the top of the agenda. Should Darty, having sold Comet in the UK (or, rather, having paid someone to tow it away), also get rid of its underperforming chains in Italy, Spain and Turkey? Or is it better to persevere and hope for long-term gains?
Last year the three laggards managed to leak away about 40% of the profits earned in France by the slick and polished Darty chain. So the debate about whether to quit, and at what price, or stay is absolutely critical. Parker is pledging that shareholders will be told the new strategy “as soon as possible and in any case by no later than the end of the current calendar year”.
Knight, by contrast, makes out that the plan, whatever it is, is close to being a done deal. “We have agreed on many, if not most, of the steps that need to be taken in order to restore shareholder value,” he says. In that case, could you share your thinking with your fellow shareholders please?
Most investors, one suspects, will swallow any frustration and welcome the fact that Knight is inside the tent. His firm is sitting on a loss of about 50% on its stake in Darty and so doesn’t lack motivation to get the share price substantially higher. All the same, more transparency would be welcome. As an activist investor, Knight cut a more sympathetic figure when, for example, he was rigorously dissecting the shortcomings of HSBC and was prepared to debate his views with all. And there’s no need for Parker to go along with this urge for opacity.