Sensient Technologies Corporation (NYSE: SXT) today sent a letter urging
shareholders to support the Company's highly qualified nominees by
voting on the WHITE proxy card. Additional information pertaining to
Sensient's upcoming Annual Meeting is available at: www.sensient.com.
Included below is the full text of the letter to Sensient shareholders:
SUPPORT SENSIENT'S CONTINUED SUCCESSFUL DELIVERY OF SHAREHOLDER
VALUE; PLEASE VOTE THE WHITE PROXY
April 2, 2014
Dear Fellow Sensient Shareholder:
You have an important decision to make at Sensient's Annual Meeting
scheduled for April 24, 2014. To protect the value of your investment in
Sensient and support the continued execution of your Board and
management's thoughtful and proven strategy, it is critical that you
vote for Sensient's nominees on the WHITE PROXY
Do not be fooled by FrontFour's misguided, simplistic and
short-sighted "plan" to improve Sensient. Its proposed
one-size-fits-all "plan" - premised on drastically cutting costs and
taking on a burdensome level of debt to buy back more stock -
demonstrates a fundamental lack of understanding of Sensient's business.
to Deliver Long-Term Value
Reject FrontFour's Nominees and Short-Sighted
VOTE THE WHITE PROXY CARD TODAY
OUR PLAN IS PRODUCING RESULTS AND POSITIONING SENSIENT FOR LONG-TERM
Since February 2013, our Board and management have actively collaborated
in implementing a deliberate plan in our Flavors & Fragrances Group to
generate higher margins and increase shareholder value by continuing to
improve our mix of high-value-added products and enhancing our operating
efficiency. We have made important investments in areas such as our
state-of-the-art Flavors headquarters facility. Starting in 2013, we
began eliminating underperforming operations and consolidating
manufacturing facilities in support of this effort. In 2014, we are
continuing those efforts.
Our comprehensive strategy is designed to ensure we are properly focused
on delivering differentiated products and innovative solutions to all of
our customers worldwide. Success requires us to continue to leverage our
technology and industry expertise as we expand our ability to provide
full flavor systems to our customers. It cannot be achieved by simply
pursuing the substantial, yet unspecified, cost cutting that FrontFour
Our position in Flavors & Fragrances today is solid, with EBIT
margins of 13.9% in 2013 exceeding the comparable margins of Givaudan
and Kerry. See accompanying chart.
And, as we implement our strategy, we are holding ourselves accountable
for delivering results. Building on the success we achieved in our Color
Group, we are committed to driving operating margins in our Flavors &
Fragrances Group into the high teens over the medium term.
Our objective is clear - sustained, long-term success. We are taking
responsible steps to ensure that the Company continues to deliver that
success. Importantly, our strategy is already yielding results:
Above all, our stock price has recently achieved an all-time
high and, contrary to FrontFour's misleading assertions, we have
delivered competitive shareholder returns over both short-term and
long-term horizons. We also outperformed peers during the 2008-2009
economic downturn. Most importantly, Sensient is positioned to continue
to deliver shareholder value based on the actions we have already taken,
the investments we have in place and the ongoing implementation of our
strategy. See accompanying chart.
OUR BOARD IS FOCUSED ON CREATING LONG-TERM VALUE
Through our operational improvements, our Board and management are
working together to drive shareholder value and enhance our ability to
return capital to shareholders. Building on our 50-year track record of
uninterrupted dividend payments, we recently announced a 9% increase
in our quarterly cash dividend. In addition, we outlined plans to repurchase
up to two million shares - approximately 4% of our outstanding
shares. Over the next 12 months, we expect to return approximately
$160 million in capital to shareholders on top of the $230 million we
have returned over the past five years.
Our plan - which combines investment to drive revenue and margin growth
with the return of capital to shareholders - is the product of our
Board's carefully considered, prudent capital-allocation strategy.
Conversely, FrontFour's "plan" appears to call for two simplistic steps:
debilitating cost cuts to improve margins in the short term and
imprudent borrowing so as to buy back more shares. We believe
FrontFour's plan is short-sighted and reckless and that pursuing it
would severely limit our financial flexibility. Simply put, we believe
FrontFour's proposal would forsake long-term value creation for
We also believe other investors share our view regarding the benefits of
balanced capital allocation. And we agree with Laurence Fink,
Chairman and CEO of BlackRock, one of the largest investment managers in
the world. Mr. Fink wrote a recent letter to the leaders of S&P
500 companies, saying, "We certainly believe that returning cash to
shareholders should be part of a balanced capital strategy; however,
when done for the wrong reasons and at the expense of capital
investment, it can jeopardize a company's ability to generate
sustainable long-term returns." i
DON'T BE FOOLED BY FRONTFOUR'S FALSE AND MISLEADING CAMPAIGN
In our view, FrontFour has established a pattern of selectively
presenting data and providing misleading and inaccurate information to
support its agenda. Its analysis of Sensient's shareholder returns
overlooks our longer-term and shorter-term outperformance. In addition,
its analysis of our ROIC results fails to properly adjust for
restructuring charges in 2013. This creates the inaccurate perception
that our ROIC declined year-on-year when in fact our ROIC improved over
the period 2009-2013.
Further, in FrontFour's description of our directors, it has ignored or
deliberately misrepresented important facts. For example, FrontFour
claims that our incoming Lead Director, Dr. Elaine Wedral, has no
technical food-sciences or operational background. In fact, she
holds over 38 patents in food science, chemistry and foodservice systems
and ran Nestle Company's North American R&D operations for over 10 years.
Dr. Wedral also earned a Ph.D. in Food Biochemistry, an M.S. in Food
Microbiology and a B.S. in Biochemistry. FrontFour has also
claimed that Hank Brown has no financial experience despite the fact
that he earned a CPA license, an LL.M. in Tax and a B.S. in Accounting.
Mr. Brown also served as the President of two public universities,
increasing financial support for both institutions during his tenure.
It is truly alarming to us that FrontFour could make such outrageous and
inaccurate claims. We believe this represents sloppy work or, worse, a
calculated attempt to deceive other Sensient shareholders in an effort
to promote FrontFour's own agenda.
FRONTFOUR'S NOMINEES ARE THE WRONG PEOPLE FOR OUR BOARD
We believe replacing members of Sensient's Board with even one of
FrontFour's hand-picked nominees would be detrimental to Sensient and
its shareholders. After reviewing the backgrounds and qualifications
of FrontFour's nominees - Stephen E. Loukas, James E. Hyman, William E.
Redmond, Jr., and James R. Henderson - we have found what we believe to
be glaring professional deficiencies and feel that the proposal of this
slate reflects a lack of sound judgment at FrontFour.
Not only do the FrontFour nominees lack experience that is relevant
to Sensient, but collectively, they have led companies into bankruptcy,
overseen the significant destruction of shareholder value, been involved
in a high-profile lawsuit over beverage-industry trade secrets and
worked closely with the former aggressive hedge fund, Pirate Capital.
In our view, a quick look demonstrates that these candidates are not fit
to serve as directors of Sensient.
- While CEO in 2006, Mr. Hyman championed the sale (in conjunction
with a Pirate Capital-dominated board of directors) of the Cornell
Companies for a mere 2% premium (the attempted sale was rejected
by shareholders), and
- While a director in 2013, Mr. Hyman supported the sale of
Mac-Gray Corporation, which an investor fund claimed unfairly
protected Mac-Gray's directors' and Moab Capital Partners'
interests at the expense of other shareholders (the case remains
pending in Massachusetts court). iii
- The court broached new legal ground when issuing the injunction,
concluding that Redmond's lies in and out of court demonstrated a
material risk that he would misappropriate PepsiCo's intellectual
- While Redmond was not fined, the Federal trial judge took pains
to describe Mr. Redmond's "false statements to three [PepsiCo]
executives" iv and "false testimony" to the court v
and the Seventh Circuit affirmed the injunction on appeal vi
- Accused in two separate pending legal proceedings of
inappropriately deregistering Point Blank's shares, allegedly to
force a going-private sale of all of the company's stock to the
activist fund in which Mr. Henderson was then an operating partner
In sum, we believe FrontFour's nominees lack beneficial industry
experience, failed to create shareholder value in numerous instances and
have previously assisted their activist sponsors in ways that give us
pause. In our view, these are not the types of people that are
suitable for your Board.
OUR BOARD IS THE RIGHT BOARD
We believe Sensient has strong, independent and experienced directors
who are highly qualified to continue leading the Company in executing
its strategic plans and whose interests are aligned with those of
FrontFour has targeted four of our highly qualified directors - all
of whom have deep knowledge of Sensient's businesses and provide
valuable guidance to the Company based on their many professional
achievements. The diverse perspectives provided by these directors
are invaluable to the Board and are in no way matched by FrontFour's
With its unique set of experience, skills and credentials, we firmly
believe this is the right Board to continue
to guide Sensient in executing on its proven strategy that is generating
sustainable value for all shareholders.
VOTE FOR THE NOMINEES WHO WILL SERVE YOUR INTERESTS
YOUR VOTE IS IMPORTANT - VOTE THE WHITE PROXY
Our current Board is committed to serving the interests of our
shareholders. We believe that we have a strong Company, a well-tested
strategy and the right leaders to continue driving shareholder value for
the long term.
We urge you to vote your WHITE proxy
card FOR the Company's directors today.
The Board of Directors of Sensient Technologies Corporation
Your Vote Is Important, No Matter How Many Shares You Own.
D.F. King & Co., Inc.
WE URGE YOU NOT TO SIGN ANY GREEN PROXY
CARD SENT TO YOU BY FRONTFOUR.
This document contains statements that may constitute
"forward-looking statements" within the meaning of Federal securities
laws. Such forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties and other
factors concerning the Company's operations and business environment.
Important factors that could cause actual results to differ materially
from those suggested by these forward-looking statements and that could
adversely affect the Company's future financial performance include the
following: the pace and nature of new product introductions by
the Company and the Company's customers; the Company's ability to
successfully implement its strategy to create sustainable, long-term
shareholder value; the Company's ability to successfully implement its
growth strategies; the outcome of the Company's various
productivity-improvement and cost-reduction efforts; changes in costs or
availability of raw materials, including energy; industry and economic
factors related to the Company's domestic and international business;
growth in markets for products in which the Company competes; industry
and customer acceptance of price increases; actions by competitors,
including increased intensity of competition; the loss of any customers
in certain product lines in which our sales are made to a relatively
small number of customers; product liability claims or product recalls;
the costs of compliance, or failure to comply, with laws and regulations
applicable to our industries and markets; changing consumer preferences
and changing technologies; and failure to complete and integrate future
acquisitions or dispositions. The risks and uncertainties identified
above are not the only risks the Company faces. Additional risks and
uncertainties not presently known to the Company or that it currently
believes to be immaterial also may adversely affect the Company. Should
any known or unknown risks and uncertainties develop into actual events,
these developments could have material adverse effects on our business,
financial condition and results of operations. This document contains
time-sensitive information that reflects management's best analysis only
as of the date of this release. The Company does not undertake to
publicly update or revise its forward-looking statements even if
experience or future changes make it clear that any projected results
expressed or implied herein will not be realized. Additional information
regarding these risks can be found in our Annual Report on Form 10-K for
the year ended December 31, 2013.
In connection with its 2014 Annual Meeting of Shareholders, Sensient has
filed a proxy statement and other documents regarding the 2014 Annual
Meeting of Shareholders with the Securities and Exchange Commission
("SEC") and has mailed the definitive proxy statement and a proxy card
to each shareholder of record entitled to vote at the 2014 Annual
Meeting of Shareholders. SHAREHOLDERS ARE ENCOURAGED TO READ THE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain the documents free of charge
at the SEC's website, www.sec.gov,
from Sensient at its website, www.sensient.com,
or by writing to Sensient Technologies Corporation, 777 East Wisconsin
Avenue, Milwaukee, WI 53202, Attention: Investor Relations.
ABOUT SENSIENT TECHNOLOGIES
Sensient Technologies Corporation is a leading global manufacturer and
marketer of colors, flavors and fragrances. Sensient employs advanced
technologies at facilities around the world to develop specialty food
and beverage systems, cosmetic and pharmaceutical systems, inkjet and
specialty inks and colors, and other specialty and fine chemicals. The
Company's customers include major international manufacturers
representing most of the world's best-known brands. Sensient is
headquartered in Milwaukee, Wisconsin.
i Laurence Fink, Chairman and CEO, BlackRock in March 21,
2014 letter to the leaders of S&P 500 companies
ii Bloomberg News, February 2, 2007
iii Complaint, Star Partners Fund v. Bullock, No.
MICV2013-05067 (Mass. Super. Ct. Nov. 21, 2013)
iv PepsiCo, Inc. v. Redmond, No. 94-C-6838, 1995 U.S.
Dist. LEXIS 19437, at *15 (N.D. Ill. Jan. 26, 1995)
v Id., at *16
vi PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir.
vii Garden Way Defrauded State, Suit Claims, Daily
Gazette (June 4, 2002)
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20140402006815/en/
[ Back To NFVZone's Homepage ]