Two Dutch newspapers reported this morning that Corporate Express's management is under pressure from activist shareholders who want to see the company broken up or sold, while it was suggested that US peer Staples Inc had made a spurned advance towards Corporate Express but was still interested.
The company has been subject to frequent M&A speculation in recent months, partly because activist hedge fund Centaurus Capital took a stake of over 5 pct in the company.
According to the Telegraaf newspaper, roughly 30 pct of the group's shareholders, including Centaurus, are pushing for break-up or takeover scenarios and at least one shareholder, York Capital, has written to Corporate Express to demand action.
'The heat is on,' Rabo Securities remarked in a note to clients while the share outperformed the market.
As of 2.20 pm, Corporate Express shares were still on the rise, gaining 9.51 pct at 8.29 eur while the AEX stood at 540.58, down 0.54 pct.
Analyst Johan van der Hooven at Theodoor Gilissen said in a note that the situation 'fits in our scenario for Corporate Express, in which management must produce improvements in light of the disappointing results of the past few quarters'.
Looking ahead to the upcoming presentation of the company's strategic review, he added that a new company strategy, break-up or sale 'would give the share price a positive impulse, in any event'.
A company spokesman denied that any company has approached Corporate Express with any kind of offer and declined to comment on any contact it may have had with its shareholders.
The spokesman also declined to discuss the strategic review, the results of which will be announced at the end of the month.
Noting that the latest speculation shows that, 'the patience of a number of activist shareholders, including Centaurus, is running out,' FBS Bankiers commented in its daily note that if the company has not received any letter demanding a sale, 'we expect that a letter will be coming soon'.
SNS Securities meanwhile pointed to another source of speculation -- CEO Franz Koffrie's absence at a 2-day Corporate Express conference in the US this week.
According to SNS analyst Martijn den Drijver, the market is anticipating the divestment of the Printing operations and the remaining Veenman operations in Germany, 'while also taking into account the removal or resignation of CEO Koffrie'.
He sees these events boosting the share price short term, but noted that whether or not they will lead to lasting value creation is 'far from certain, especially without a new game plan and improved execution from a new management team'.
However, the analyst said it is also possible that management will stay on and continue its current strategies, in which case 'the shares will decline rapidly'.
Den Drijver said he does not expect the strategic review to propose radical solutions 'such as the sale of Australian operations or massive restructuring of the US operations'.
He also cited a Staples takeover as a viable scenario.
Speaking about the US investor conference, the analyst said the 2-day event 'did not assuage fears about a further weakening of the US division's results,' adding, 'We were not impressed by the behaviour and presentation of new US president Jay Mutscheler who did not display confidence and enthusiasm.' Dave van Ginhoven, dave.vanginhoven@thomson.com dvg/cm2 COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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