Activist hedge fund Jana Partners LLC on Wednesday said it has raised its voting stake in CNET Networks Inc. (CNET) to 10.6% from 8.1%, and it criticized the technology media firm for purportedly misrepresenting its intentions.
In a press release,
Jana denied that it is attempting to gain control of the company
"without offering sufficient value to all stockholders," as CNET
contended on Monday. Jana managing partner Barry Rosenstein said the
group's goal is to add qualified board members who would focus on
creating long-term value for shareholders, not acquire the company on
the cheap.
Rosenstein also said it was CNET's "own underperformance that makes it more vulnerable to an opportunistic acquirer looking to acquire it cheaply."
Jana, which is leading a shareholder group that includes venture capital firm Spark Capital Partners LLC and Paul Gardi of Alex Interactive Media LLC, is looking to increase the size of CNET's board of directors from 8 to 13 and take control by placing seven members on the board. First, the hedge fund must go to court and overturn CNET bylaws that require a shareholder to have held at least $1,000 worth of stock for a year before it can nominate directors. Jana has been a shareholder for less than a year.
Although the investment firm has a good chance of winning that right in court, it faces an uphill battle assuming control of the company. But, as we've argued before, drastic changes are needed at CNET, which has been surpassed by nimbler competitors in the Internet publishing arena. A sale of the company, either all of it or piecemeal, seems in store at some point.
Written by David Shabelman
See Jan. 9 press release from Jana Partners via Yahoo!
See Jan. 7 post from Tech Confidential
See Jan. 9 post from paidContent.org
See Jan. 9 post from DealBook
