Conduent Repurchases Shares From Carl Icahn and Affiliates
Conduent has repurchased all common stock owned by Carl Icahn's affiliates for $3.47 per share, totaling approximately $132 million. The transaction was funded through Conduent's cash reserves and credit facility. As a result, Icahn's affiliates no longer hold shares in the company. Additionally, three board members associated with Icahn have resigned. CEO Cliff Skelton expressed confidence in the company's strategy and growth prospects, stating plans to focus on debt reduction. The Special Transaction Committee, advised by independent legal and financial experts, unanimously recommended the repurchase.
- Repurchase of shares at $3.47 per share, reflecting confidence in the company's valuation.
- Total buyback cost of approximately $132 million funded from cash reserves and existing credit facility.
- Icahn's affiliates no longer hold shares, potentially reducing external influence.
- Three board members associated with Icahn resigned, possibly leading to more independent decision-making.
- Planned focus on debt reduction to improve financial stability.
- Unanimous recommendation by Special Transaction Committee, advised by independent experts.
- Large cash outflow of $132 million, potentially straining financial resources.
- Repurchase financed through existing credit facility, possibly increasing debt burden.
- Resignation of three experienced board members might impact leadership stability.
Insights
Financial Analysis: The decision by Conduent to repurchase shares from Carl Icahn and his affiliates at
However, it's essential to consider the financial implications of utilizing cash reserves and existing credit facilities for the repurchase. While reducing shareholders' equity and potentially improving financial ratios, Conduent's liquidity position might be impacted in the short term. Moreover, the emphasis on further debt reduction suggests management's prudent approach to balance sheet health, which could be a positive indicator for long-term stability.
For retail investors, understanding the dual-edged nature of share buybacks is crucial. Although the buyback might positively impact EPS and share prices, it also means the company is utilizing a significant portion of its cash reserves. The investor should monitor subsequent financial statements to gauge the impact on liquidity and whether the debt reduction strategy effectively offsets the decreased cash reserves.
Corporate Governance Analysis: The resignation of board members Hunter Gary, Jesse Lynn and Steven Miller, all employed by Icahn Parties, represents a significant shift in corporate governance at Conduent. Carl Icahn, known for his activist investment strategies, often influences company boards to drive shareholder value. With his affiliates' departure, Conduent's board now likely has greater autonomy to pursue long-term strategic goals without the immediate pressure from activist investors.
This transition can have both positive and negative aspects. On the positive side, the board can focus on long-term strategic initiatives that may not have been prioritized under the influence of activist investors. On the downside, the absence of Icahn’s oversight could lead to less aggressive cost-cutting or strategic changes, which some investors might find concerning.
Retail investors should recognize the importance of strong and independent board governance, ensuring that the interests of all shareholders are well-represented. The formation of a Special Transaction Committee consisting of independent directors to recommend the repurchase transaction reflects good governance practices. Monitoring corporate governance changes and board decisions post-Icahn's involvement will be critical in assessing the company's strategic direction.
Following the purchase, the Icahn Parties no longer hold any Conduent common shares. In connection with the transaction, Hunter Gary, Jesse Lynn and Steven Miller, who are employed by the Icahn Parties, have resigned from the Company’s board of directors (the “Board”).
“Our decision to repurchase shares reflects the confidence we have in our business, our strategy and our long-term growth prospects,” said Cliff Skelton, Conduent President and Chief Executive Officer. “Following this transaction, we will continue to focus our capital allocation in the near-term on additional pay down of debt to further reduce our debt leverage ratios. I would also like to thank Carl for his support and his team for their contributions to our Company over the years.”
Carl Icahn said, “We believe we have left the Company in good hands with Cliff and the rest of the Conduent management team. We wish them the best.”
The transaction was unanimously recommended to Conduent’s Board by a Special Transaction Committee of the Board, comprised solely of independent directors. The Special Transaction Committee was advised by independent legal and financial advisors. The entire Board, except for members employed by Icahn Parties, who recused themselves from the vote, voted in favor of the transaction.
Jefferies LLC acted as financial advisor to the Special Transaction Committee and Willkie Farr & Gallaher LLP served as independent legal counsel to the Special Transaction Committee.
About Conduent
Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them. The Company leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical solutions. Through a dedicated global team of approximately 59,000 associates, process expertise and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Conduent adds momentum to its clients’ missions in many ways including disbursing approximately
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Trademarks
Conduent is a trademark of Conduent Incorporated in
Forward-Looking Statements
This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” "plan," “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” "continue to," “endeavor,” "if,” “growing,” “projected,” “potential,” “likely,” "see," "ahead," "further," "going forward," "on the horizon," “enable,” “strategy,” and similar expressions (including the negative and plural forms of such words and phrases), as they relate to us, are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact included in this press release are forward-looking statements, including, but not limited to, statements regarding the share repurchase transaction and our plan to continue to allocate capital to reduce our debt levels. These statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, many of which are outside of our control, that could cause actual results to differ materially from those expected or implied by such forward-looking statements contained in this press release, any exhibits to this press release and other public statements we make. Important factors and uncertainties that could cause actual results to differ materially from those in our forward-looking statements include, but are not limited to Conduent’s ability to realize the benefits anticipated from the share repurchase transaction and other factors that are set forth in the “Risk Factors” and other sections of our Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. Any forward-looking statements made by us in this press release speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether because of new information, subsequent events or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240610839606/en/
Media:
Sean Collins, Conduent, +1-310-497-9205, Sean.Collins2@conduent.com
Investor Relations:
Giles Goodburn, Conduent, +1-203-216-3546, ir@conduent.com
Source: Conduent Incorporated
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