Activist Investor Barington Urges Omnova Solutions to Break Up


Published Date : Dec 04, 2014

Activist investor Barington Capital Group LP has sent a letter to the Ohio based Chemicals Company Omnova Solutions Inc. urging it to break up. Barington believes that Omnova has not performed well and can do better if it focuses on its biggest operations, as stated in the letter.

The investor holds almost 2% of the stake in the company.

Omnova has two operational business segments. The first one is performance chemicals that consists of chemicals and coatings, which is used in a wide range of markets from oil and gas industry to magazine printing. The second segment is of engineered surfaces that comprise of specialty plastics and fabrics that are used in carpets and autos, among other things. The performance chemicals unit account for about 75% of total revenue and operating profit.

Barington wants Omnova to sell off the engineered surfaces segment, which is a smaller business and aid up the performance chemical segment with hiring and acquisitions. The stock performance was criticized in the letter and the polymer-maker is advised to use its cash to buy back the beaten-down shares.

The shares of Omnova had fallen around 26% this year till Tuesday, December 02, 2014. However, the shares rose about 7.6% on Wednesday, December 03, 2014.

In a statement issued on Wednesday, Omnova said that the board and management of the company are totally dedicated to act in the best interests of the organization and all of its stakeholders and it will continue to assess all the options to generate a better shareholder value.