Corvex, Related Renew Campaign to Oust CWH Board

NEWTON, MA-Corvex Management LP and Related Fund Management LLC are seeking once again to remove the entire board of CommonWealth REIT. The two companies, whose separately managed funds own a combined 9.6% of the Newton, MA-based CWH's outstanding shares, on Tuesday filed solicitation materials with the SEC seeking shareholder approval for the board's removal and the election of five new trustees. In response, CWH says it believes “the Corvex/Related hostile takeover is not in shareholders' best interests.”

The consent solicitation filing, and CWH's preparation of revocation statement in rebuttal to the Corvex/Related solicitation, mark the latest salvo in a battle that began this past February. At that time, the two companies made an unsolicited offer to buy 100% of CWH's stock for 27.50 per share, later dropping the per-share price to $24, or about $2.9 billion, and threatening to oust the entire board if their offer wasn't accepted.

"We continue to take the steps necessary to empower shareholders to take back CommonWealth through the removal of the entire board of trustees,” Keith Meister of Corvex and Jeff T. Blau of Related say in a statement. On the close relationship between CWH and REIT Management and Research, which is owned by the father-and-son team of Barry and Adam Portnoy, who also serve as managing trustees for CWH and its four subsidiaries, Meister and Blau say “The facts speak for themselves.”

Between 2007 and 2012, Meister and Blau say, “the fees paid by CommonWealth to the Portnoy-owned RMR increased 29.5%, while, at the same time, shareholders suffered a 67.5% drop in share price. We believe our consent solicitation will enable shareholders to elect truly independent and accountable trustees in the near term and serve as a referendum on the value destruction under CommonWealth's current trustees and management.”

For its part, CWH calls Corvex and Related's consent solicitation “another attempt to seize control of the company for short-term gains,” and says that “a wholesale removal, without cause, of the entire CWH Board would materially harm CWH's business and operations. CWH's board and management intend to vigorously defend CWH against Corvex/Related's hostile takeover campaign and efforts to circumvent regular election processes.”