Keynote in pact with Holder group

Thursday, 13 March 2003, 20:30 IST
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SAN MATEO: Keynote Systems Inc. reached an agreement with a shareholder group led by Barington Companies Equity Partners L.P. to end a potential proxy fight. In a press release Wednesday, the Internet performance management and testing services provider also said it plans to start an issuer tender offer around March 24 to repurchase up to 7.5 million shares at $9.50 a share cash. The shares represent about 32.6% of the company's total shares outstanding as of Jan 31. In the first quarter ended Jan. 31, Keynote repurchased about 4.3 million shares at $8 apiece in a Dutch auction tender offer. Barington, a New York-based investment firm, had proposed a competing slate of directors to be elected at the company's annual shareholder meeting on March 25. The terms of all six directors expire at the meeting. Last week, Keynote Systems called the potential proxy contest "unfortunate and unnecessary." "Keynote's board and management are convinced that the company has a bright future, which it can achieve while also simultaneously distributing significant cash to Keynote stockholders through stock repurchases, issuer tender offers or dividends," Keynote said March 5. As of Dec. 31, Keynote had cash, cash equivalents and short-term investments of about $203.4 million. In addition, Keynote said it will form an independent nominating committee of the board to conduct a search as soon as practicable for an additional outside director to join its board. Keynote added that it will consult with the Barington Companies group and its other major stockholders with respect to the selection of the additional independent member. According to the Barington preliminary proxy solicitation material filed March 4 with the Securities and Exchange Commission (News - Websites), Keynote's current board "has failed to appropriately oversee the company's operations," resulting in " unnecessarily depleted cash due to poor oversight of the company's real estate needs and diluted shareholder value by approving wasteful acquisitions." Barington had proposed in the SEC filing that Keynote begin a Dutch tender offer for 10 million shares at $10 a share.
Source: IANS