Press Release from Pzena Investment Management Regarding Lear Corporation’s Current 8-K
Filing
The Form 8-K filed with the SEC by Lear Corporation today included a recent opinion of the Court of
Chancery of the State of Delaware regarding a motion to enjoin the upcoming shareholder vote on
American Real Estate Partner’s, LP (Carl Icahn’s investment company) proposal to acquire Lear.
Within the opinion is a statement regarding Pzena Investment Management’s decision to refrain from
participating in an October, 2006 equity private placement offer. The court’s opinion stated that
we declined the offer “saying the $23 per share price was too high.” This statement misrepresents
the position taken by Pzena Investment Management regarding the offering.
The facts are as follows:
| 1. |
|
We were asked to respond to Lear’s offer on an overnight basis. We determined that the
offering price was far below the fair value for the equity. We strongly desired to
participate, and communicated our interest to Lear management. At no time did we indicate
that the price was too high. |
| 2. |
|
The offering, in the form of a private placement, presented numerous legal and operational
considerations. Clients of registered investment advisers such as Pzena Investment Management
generally restrict their adviser’s mandate to public securities. Given that this was an
overnight offering, there was insufficient time to obtain approval or requisite funding to
participate in the offering and Pzena Investment Management was reluctantly forced to decline. |
This same set of facts impacted another Lear shareholder who we believe was similarly prevented
from participating due to the structure and limited timeframe of the offering. As described in our
SEC filings and communications with the company, Pzena has consistently believed that the fair
value for Lear is between $55 and $60 per share.
We continue to believe that Lear shareholders should reject the current offering as the low
offering price reflects conflicts of interest between management and public shareholders.
Press Release from Pzena Investment Management Regarding Today’s SEC Filing by Lear
Corporation
New York, NY — In a filing with the SEC today Lear Corporation has contended that Pzena Investment
Management acted in a manner contrary to our claim that Lear stock is worth between $55 and $60 per
share. In the filing, they point to sales made during a specific time period, February 1, 2006
through February 14, 2007 as evidence of inconsistency. There are no inconsistencies given the
fiduciary responsibilities borne by a registered investment advisor.
The facts are:
1) We sold shares based on client-directed account liquidations.
2) We sold shares based on client-related tax considerations.
3) As Lear’s share price recovered in late 2006, we sold shares to limit concentration risk in
individual client accounts consistent with our responsibility as a discretionary investment
advisor. Pzena’s standard investment approach is to increase position size as shares fall and to
trim when share prices rise.
We continue to own 6.5 million shares of Lear stock representing approximately 8.5% of the firm,
and as we have said, believe that the company is worth between $55 and $60 per share.
Contact:
Pzena Investment Management, Inc.
William Lipsey, 212-583-1408
Lipsey@Pzena.com