Ryan Drexler of Consac, a U.S. investment fund, again urged Quiksilver's board to consider a sale of the company – for the second time in two months and despite significant changes in the board sports company's leadership last month.
This time the activist investor stated in his letter to Bob McKnight, Quiksilver's chairman, that Consac owned more than 3.5 million shares in the company, as compared with 2 million when he wrote the previous letter in March. Since then, the company has seen the departure of its chief executive, Andy Mooney, who was replaced at the end of March by a Frenchman, Pierre Agnes, who previously acted as global head of apparel and president of Quiksilver Europe – among other top-level management changes.
Drexler wrote that the board should explore strategic options “with an emphasis on selling the company in order to preserve diminishing shareholder value,” suggesting that “this company could be worth at least twice its current market capitalization” of less than $300 million.
Drexler suggested that there is substantial leeway to reduce costs at Quiksilver and added that the company may be most valuable to a “strategic buyer such as Nike Inc. or VF Corp.” He wrote that the group's network of 713 stores could be a strong enticement for such strategic buyers – particularly referring to Hurley, the Nike group's action sports brand.
Drexler criticized Quiksilver for what he described as disappointing developments since his previous letter – from its quarterly performance to the share price. He even attacked the level of McKnight's compensation. The letter noted that shareholders saw the Quiksilver share price drop by “another 26 percent from a one-month high in March, while enduring an even more precipitous 81 percent decline from the stock's two-year high.” Quiksilver did not respond to an inquiry about its reaction to Drexler's comments.