Jana can nominate candidates for CNET board
CNET, March 13, 2008
Hedge fund Jana Partners LLC, which is leading a group of investors trying to take control of online media company CNET Networks Inc’s (CNET.O: Quote, Profile, Research) board, said on Thursday that a court upheld its right to nominate seven directors. Shares of CNET, best known for its technology news Web site, rose as much as 6 percent on the news.
CNET said in January that the efforts of the activist investor group to nominate two directors to existing board seats and expand the board by five members were “improper” under its bylaws.
Jana took the matter to the Delaware Court of Chancery through an affiliate, challenging CNET’s interpretation of its bylaws.
“This is the first step towards putting aside the legal mechanisms CNET has relied on to fight our effort to create stockholder value,“ Jana Managing Partner Barry Rosenstein said in a statement.
A CNET spokeswoman was unavailable for comment.
Jana, which holds about 10 percent of CNET’s voting stock, has said that the San Francisco-based company has “significantly lagged peers in value creation and performance” and needs to be “revitalize(d).“
Jana is partnering with investment funds Sandell Asset Management Corp and Velocity Interactive Group, venture capital firm Spark Capital and technology entrepreneur Paul Gardi of Alex Interactive Media to shake up CNET’s board.
The group hopes its nominees—drawn from the tech, media and finance industries—will bring the expertise needed to turn CNET around and boost its stock price.
It said earlier that it would nominate Gardi and Spark Capital founder Santo Politi to replace the two CNET directors scheduled to stand for reelection at the company’s next annual meeting in June.
In addition, Jana proposed expanding CNET’s board from eight members to 13 and filling the resulting vacancies with its nominees.
Last week, the nominees met with CNET representatives in an attempt to reach a settlement prior to the ruling, a person familiar with the group’s affairs said.
The group has also been talking with CNET shareholders, as it tries to drum up support for its slate of nominees, the person said.
CNET shares were up 17 cents, or 2.4 percent, at $7.37 in afternoon Nasdaq trade after reaching as high as $7.65 earlier.
[By: Anupreeta Das]
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