Related, Corvex Press Ahead After CWH Rejection

NEWTON, MA-CommonWealth REIT, based here, said Monday it had rejected an offer by Related Fund Management and Corvex to purchase all shares of the company for $24.50 per share, and that it had adopted provisions of the Maryland Unsolicited Takeovers Act. In response, Related and Corvex said they're going ahead with a consent solicitation scheduled for April 22.

“It is disgraceful that CWH would unilaterally attempt to take away a right shareholders have had since 1986 solely in an effort to further entrench its underperforming leadership team,” Related and Corvex say in a release. “This latest effort is in our and our lawyers' view completely invalid under Maryland law, and is further evidence of the ongoing efforts by the Portnoy family to disenfranchise shareholders.” Barry Portnoy was a founder of CWH in '86 and has been a managing trustee since that time; his son Adam Portnoy serves as president.  “We firmly believe that removal of the entire board by written consent is the only means available to shareholders to immediately put a stop to any further value destruction by CWH's management and trustees."  

Related and Corvex filed a definitive consent solicitation statement with the SEC this past Wednesday, for shareholders to act by written consent to effect the removal of the entire board of trustees of CWH. The two companies control 9.2% of CWH's stock.

In a release earlier on Monday, CWH spelled out the reasons its board had rejected the Related/Corvex offer. “The conditional offer from Corvex/Related appears to be part of a plan by Corvex/Related to seize control of CWH for their own benefit, or, alternatively, to realize a quick profit by forcing a sale of CWH before the full benefits of CWH's current business plan are realized,” the release states.

Over the past few years, according to the release, “CWH has sold approximately $1.5 billion of primarily suburban office and industrial properties and re-invested proceeds into high quality CBD office properties with strong long-term growth prospects. Now, as this multi-year business plan is starting to demonstrate success, Corvex/Related seem intent upon realizing these benefits for themselves or forcing a sale before the benefits of the business plan can be fully realized by all shareholders.”