Marcato threatens legal action against Buffalo Wild Wings
Oct. 14, 2016
by Erica Shaffer
Disagreement over Buffalo Wild Wings' direction heats up as investment manager lobbies for shareholder information.
SAN FRANCISCO – In a letter to the Buffalo Wild Wings board, shareholder Marcato Capital Management LP said it has no desire to bring their concerns to a court of law, but warned “…we are quickly approaching a point where management’s obstinate resistance will leave us with no other choice…”
Marcato managing partner and founder Mick McGuire has been public with his firm’s discontent with Buffalo Wild Wings’ growth strategy. The company believes growth for the sports-themed chain lies in international markets and investments in emerging brands. But McGuire argued that the company should focus on its core business and cease focusing on emerging brands, which he described as “hit-or-miss” growth drivers. McGuire also called for a change in board leadership, but with input from major shareholders.
Marcato, which owns 5.2 percent of the outstanding common shares of Buffalo Wild Wings, sought shareholder list information in an effort to start a dialog with other investors. But, according to McGuire, Buffalo Wild Wings’ board was less than forthcoming with that information. Additionally, Buffalo Wild Wings appointed three new independent board members, a move viewed by Marcato as a “unilateral decision.”
“We are troubled by Buffalo Wild Wings’ actions that have disenfranchised shareholders, entrenched management, and thwarted our ability and legal right to communicate with other shareholders,” McGuire said in a statement. “The company’s refusal to provide us with readily available basic shareholder information, coupled with the recent appointment of three new board members unilaterally and without shareholder input, has exacerbated our concerns that shareholders’ interests are not being served.”
In the letter, Marcato said the investor submitted a request for shareholder list materials on Aug. 22, but the company has not complied with the request. Marcato also claims that Buffalo Wild Wings initially refused to acknowledge that Marcato even owned any shares in the restaurant chain.
“We are troubled by the lengths to which management has gone in an apparent attempt to thwart our communications with other shareholders and have no doubt that our fellow shareholders will find management’s behavior as disconcerting as we do,” according to the letter. “We were further troubled to hear of your decision on October 6th to appoint three new directors to the company’s board, a decision made unilaterally and without consultation with the company’s shareholders. These new appointments were clearly intended to create the false impression of meaningful change, but without actual engagement in constructive dialogue with shareholders.”
In the letter, Marcato demanded the requested materials be furnished immediately, adding “Accordingly, we reserve all rights and remedies.”