The Shareholder Forum

supporting investor interests in the use of their capital to produce goods and services


Purpose & History of Services

The Shareholder Forum

The Shareholder Forum supports investor interests in corporate enterprise value with services that require independence – and that may benefit from the Forum’s network resources and recognition for advocacy of long term investor interests – to assure a definition of relevant issues and fair access to information that can be relied upon by both corporate and investor decision-makers.

The policies that provide a foundation for the Forum’s marketplace functions have been carefully developed and tested to allow any investor to participate in its communications, either anonymously or visibly, without acting in concert. Established originally to accommodate professional fund managers, this independent moderator function has proved to be consistently effective in managing orderly processes of issue definition for rational analysis by fiduciaries who are responsible for informed decisions.

Initiated in 1999 by the CFA Society of New York (at the time known as the New York Society of Security Analysts) with lead investor and former corporate investment banker Gary Lutin as guest chairman to address the professional interests of its members, and independently supported by Mr. Lutin since 2001, Forum programs have achieved wide recognition for their effective definition of important issues and orderly exchange of the information and views needed to resolve them. The Forum's ability to convene all key decision-making constituencies and influence leaders has been applied to subjects ranging from corporate control contests to the establishment of consensus marketplace standards for fair disclosure, and has been relied upon by virtually every major U.S. fund manager and the many other investors who have participated in programs that addressed their interests.

Currently important applications of the Forum’s independent position include the support of corporate managers who wish to provide the leadership expected of them by responding to activist challenges with orderly reviews of issues relevant to long term investor interests.

Requests for Shareholder Forum consideration of support may be initiated confidentially by any investor or by the subject company, or by the professional advisors to either.  

Special Program


Independent Analysis of Shareholder Interests

in a merger transaction proposed by

Providian Financial Corporation



Program Index



Debate over Providian appraisal rights heats up
Fri Aug 26, 2005 03:15 PM ET

CHICAGO, Aug 26 (Reuters) - The debate over Washington Mutual Inc.'s (WM.N: Quote, Profile, Research) proposed buyout of Providian Financial Corp. (PVN.N: Quote, Profile, Research) heated up again on Friday with one investor advisory service urging investors to disregard the advice of a rival.

Proxy Governance, a Vienna, Virginia-based firm that researches takeovers for institutional investors, warned Providian shareholders unhappy with the $6.45 billion deal that they would be making a costly and risky bet if they heeded the advice of San Francisco-based Glass Lewis & Co., another takeover research firm.

During a conference call with clients late Thursday, Glass Lewis & Co. reiterated a recommendation it made last week that Providian shareholders consider exercising their rights under Delaware law to have a court determine the fair value of their shares rather than voting in favor of the deal.

Those rights, known as appraisal rights or dissenters rights, essentially permit shareholders to opt out of the terms of the deal. Those who choose to do so agree instead to accept what a Delaware court determines to be a fair price.

Glass Lewis & Co. said the median premium that dissident shareholders have received as a result of the process in the past was 20 percent above the deal price. But it acknowledged that the process was "somewhat convoluted" and should be "approached with some caution."

Washington Mutual's proposed purchase of Providian, which inaugurated what has become a summer of consolidation in the credit card industry, has turned into one of the year's more controversial deals because Washington Mutual's $18.71-a-share offer price represented a 4.2 percent premium to the stock's last closing price prior to the announcement.

Several shareholders, including Putnam Investments, which controls 7.5 percent of Providian's shares, believe the price is too low and have come out against the transaction, as have at least two leading investor advisory services: Glass Lewis & Co. and Egan-Jones.

But Proxy Governance, which like Institutional Shareholder Services has recommended the merger be approved, said that by throwing the issue to the courts, Providian shareholders were exposing themselves to "a not insignificant possibility" that they would get a lower price for their shares than Washington Mutual is offering.

It warned that while Delaware does not have a definitive approach to determining share value in such proceedings, it requires the appraisal to be based on the company's value as a "stand-alone entity."

"Any value attributable to synergies or benefits from the merger itself -- value generally reflected in a takeover price -- is subtracted to obtain the 'fair value' for appraisal purposes," Proxy Governance warned.

What's more, Proxy Governance said that if enough shareholders pursued the appraisal option, the number of shares needed to approve the merger might not be delivered next Wednesday, when shareholders are scheduled to vote on the deal. If the deal is aborted, it argued, Providian shares could slide lower.

"We believe that advising a vote against a merger as a general recommendation for all shareholders -- with the expectation that the transaction will be approved and provide the opportunity for price improvement in the courts -- is not prudent," Proxy Governance wrote.

"It is especially imprudent in this case, where any benefit from appraisal rights seems elusive."


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Publicly open programs of the Shareholder Forum are conducted for free participation of all shareholders of a subject company and any fiduciaries or professionals concerned with their decisions, according to the Forum’s stated "Conditions of Participation." In all cases, each participant is expected to make independent use of information obtained through the Forum, and participation is considered private unless the party specifically authorizes identification.

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