* To increase board to nine members from eight
* Lear says would buy back $800 mln shares in next 12 months
* To start on new $750 mln buyback program soon after
* Lear shares up 1.1 pct
By Sagarika Jaisinghani and Svea Herbst-Bayliss
April 1 Auto parts maker Lear Corp
avoided a proxy battle with investors Marcato Capital Management
LLC and Oskie Capital Management LLC by agreeing to increase and
quicken the pace of its share buyback program and add a board
Marcato - a $1.4 billion hedge fund run by Mick McGuire, one
of activist investor William Ackman's former partners - put
pressure on Lear in February, saying it planned to nominate
candidates to the company's board.
Marcato and Oskie have withdrawn their slate and will
support the company's nominees, Lear said on Monday, after it
agreed to expand the size of its board to nine from eight.
Marcato reported a 5.2 percent stake in Lear in February,
but said in March it had raised its holding to 5.9 percent. ()
Activist investing has become increasingly popular in the
last few months with more money being allocated to the strategy
as some players, including Marcato, boast some of the strongest
returns in the $2.6 trillion hedge fund industry.
McGuire's fund, whose other key holdings include Corrections
Corp of America, Cincinnati Bell Inc, NCR Corp
and Ryman Hospitality Properties Inc, ranked
among last year's top performers with a roughly 29 percent gain.
His low-key approach with Lear likely saved both Lear and
Marcato millions of dollars by avoiding a full proxy fight -
often costly and disruptive.
BUMP IN SHARE BUYBACKS
Lear, which repurchased $200 million of its shares in the
first three months of 2013, said it would buy back the remaining
$800 million in its program in the next 12 months. Lear had
earlier said it would complete the program by the end of 2014.
Lear also said it would start on a new $750 million buyback
program soon after the current plan ended.
"Over the past two years, Lear has returned more cash to
shareholders through dividends and share repurchases as a
percentage of our market capitalization than any of our
automotive supplier peers," Chairman Henry Wallace said in a
The company, which has a market value of more than $5
billion, had cash and equivalents of $1.40 billion as of Dec. 31
and no short-term debt balances outstanding. It had long-term
liabilities of $1.37 billion.
"When you look at the financial impact of doing the
repurchases, it will not put Lear at a compromised position,"
Guggenheim Securities LLC analyst Matthew Stover said.
Lear has the flexibility to invest in its own business as
well as to pursue acquisitions, Stover said.
Southfield, Michigan-based Lear reported a fourth-quarter
profit in February that beat analysts' expectations.
In 2007, Lear rejected a $3 billion buyout attempt by an
affiliate of billionaire investor Carl Icahn.
Lear's shares were up 1.1 percent at $55.48 in afternoon
trading Monday on the New York Stock Exchange. They have gained
8 percent since Feb. 8, when Marcato said it would nominate
candidates to the board.