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Starboard advertises operational know-how in buying for SPAC objectives

© Reuters. Jeffrey Smith, CEO of Starboard Value LP and Chairman of Papa Johns International Inc., speaks during an interview on CNBC on the NYSE floor in New York

By Svea Herbst-Bayliss

BOSTON (Reuters) – Jeffrey Smith, co-founder of activist investment firm Starboard Value LP, has been teaching public corporations for 17 years that he and his team can help improve their business. Now he's saying the same to private companies.

Starboard announced this week that it raised $ 360 million through a blank check acquisition vehicle called SVAC and plans to buy a solid but below par private technology, healthcare, consumer, industrial, hospitality, or entertainment company to help it then merge into a public company.

There are already almost 100 so-called SPACs, including the Tontine Holdings of activist William Ackman and the former CEO of Goldman Sachs (NYSE :), Gary Cohn, as well as the former CohnRobbins Holdings of Cliff Robbins, which are looking for deals.

What sets Starboard apart, Smith said in an interview, is the company's long history of improving public companies like Darden Restaurants (NYSE 🙂 with a team of experts.

"If a family brings their company, their baby in essence, with us, we will move their business to a better place," he said, adding that he and the consultants and directors he has recruited for SVAC identify weaknesses and repair and be a bridge to public markets that would not have existed before.

Starboard, which won 17 board seats more than any other activist in the first half of 2020, has been known to scare "unsafe" business leaders with its phone calls, Smith admitted.

But now, he said, private company bosses are flattered when he calls. "They know that I can't do anything without your permission and they want to hear what I have to say."

After the first approach, Smith says that the work that needs to be done in a private or public company is often similar and that Starboard's approach would be the same. based on a tried and tested playbook that increased returns in Darden Restaurants (O 🙂 and Papa John's Pizza (O :).

At a time when the COVID-19 crisis has weighed on their businesses for many companies, Smith said it was more important than ever to have top-performing leaders. But some boards are using the pandemic as a shield to hold on to the status quo, he said, warning, "Boards can't accept mediocrity now because the gap between the great and the mediocre is getting bigger."

After selling nearly three-quarters of its stake in eBay (O 🙂 and exiting Resideo Technologies (N :), Starboard, which is investing approximately $ 6 billion in assets, has dry powder for new campaigns.

"We're finding great opportunities and this is a good environment to do what we do," said Smith.

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