Activist investor to seek vote on Spirent shake-up

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The Independent Online

A damaging showdown between the management of the telecoms testing company Spirent and activist shareholder Sherborne Investors is set to take place after the company's board rejected proposals to replace its chairman and speed up its restructuring plan.

Sherborne owns a 14 per cent stake in Spirent. Sources said it is likely to requisition an extraordinary general meeting to allow Spirent shareholders to vote on its proposals. The sources said Sherborne believes it has the support of the majority of shareholders.

Sherborne wants toreplace John Weston, Spirent's chairman, and three other board members with its own nominees. Mr Weston, a former BAE Systems chief executive, is also chairman and acting chief executive of the embattled software company iSoft. Sherborne plans to replace Mr Weston with its own candidate, Edward Bramson, who is chairman and chief executive of Sherborne.

Spirent said that it does not believe it is in its shareholders' best interests to accept the proposals, as the plan would breach a number of key principles of the Combined Code of Corporate Governance.

Spirent also said the management shake-up would in effect have ceded control of Spirent to Sherborne without offering a takeover premium or a chance to vote on the issue.

Sherborne has been meeting other major stakeholders over recent months to gain support for its plans. It has argued that the company is badly managed and its valuation suffers as a result. Spirent is currently valued at around £520m.

The investment bank UBS said that Spirent's depressed operating margins offer more room to restructure than the plan targeted by the current management's restructuring plan. UBS said: "Sherborne has a remarkable track record as an active shareholder. The threefold increases recorded by stock prices of companies in which they have invested in recent years - Elementis and 4Imprint - highlights the importance of today's move."

Mr Bramson was previously at Hanover Investors, which, like Sherborne, builds stakes in underperforming companies before taking an active role in turning around the businesses.

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