An activist investment group led by Edward Bramson has won its battle to remove John Weston as non-executive chairman of Spirent Communications, the telecommunications testing equipment company.
Sherborne Investors, based in New York, won 55 per cent support at yesterday’s extraordinary general meeting for its motion to remove Mr Weston from the executive board of Spirent. He is also non-executive chairman and acting chief executive
Sherborne was seeking to remove Mr Weston and two other Spirent directors and replace them with four of its own appointments, including Mr Bramson as chairman.
Ian Brindle, former UK chairman of PwC; Gerard Eastman, a Sherborne employee; and Alexander Walker, former chief executive of Yule Catto, will join the Spirent board.
Sherborne has led a campaign against the chairman of Spirent, saying the company had underperformed because of a failed acquisition strategy and a declining operational performance.
It had identified Spirent’s North American operations, which represent about 70 per cent of consolidated sales revenues and employ 1,800 people, as an area where big operational improvements could be made.
Sherborne has built a 15 per cent stake in Spirent since August and was supported in its moves by Artemis Investment Management and Credit Suisse Asset Management, which together controll another 10 per cent of the shares.
Aberforth, M&G, Blackrock and Legal & General are also believed to
have voted for the motion yesterday.
Mr Bramson has a record of turnrounds within the UK market. With his previous vehicle, Hanover Investors, he effected a change at Elementis, the speciality chemicals group, and at 4imprint, the promotional products company.
However, the campaign to oust Mr Weston has split shareholders. A few agreed with Mr Weston and some Spirent customers that the incoming management did not have sufficient experience in the telecoms industry. They also believed Sherborne’s proposals breached corporate governance rules.
Sherborne said it “appreciates and takes seriously the broad shareholder mandate it has received”.
“The new directors will immediately start work with Spirent’s management team to restore profitability and continue to focus on
the company’s strong market positions,” a spokesman said
Sherborne proposed to keep Anders Gustafsson as chief executive and Eric Hutchinson as chief finance officer.
Board members Marcus Beresford and Kurt Hellström also announced their intention to resign following Sherborne’s victory.
The former directors were disappointed by the result. “They regret that the long-term future of a company appears to have been largely decided on the basis of the speculative potential for short-term share price gain rather than on the long-term success of the company,” the five said in a statement.
Shares in Spirent, which have risen 70 per cent since Mr Bramson first bought a stake in the group in August, closed up ¼p at 55¼p.