LONDON American activist investor Jason Ader on Monday claimed that his proposals to shake-up online gambling company Bwin.Party by bolstering its board had won support from other shareholders.
Ader, whose asset management firm SpringOwl is Bwin.Party's fourth-largest shareholder, said in April that he wanted four new directors elected to the company's board to tackle what he describes as a continuing decline in the business.
Bwin.Party has urged shareholders to vote against the proposal, saying it would make the board too large and hamper decision making.
Ahead of its annual meeting on May 22, Ader said in a statement that Bwin's board had "overseen significant shareholder-value destruction" through a failing strategy resulting in the company underperforming compared with its rivals. Ader also criticised a "runaway cost structure" and its impact on profitability.
"We have received incredible support from the Bwin.Party shareholders we have already spoken with and look forward to more conversations as shareholders have the opportunity to add sorely needed skills to the board of our company," Ader said.
He did not give details on the level of support SpringOwl had won.
Ader has proposed that internet entrepreneur Michael Fertik, lawyer Francis Grady, venture capitalist Kalendu Patel and gaming industry expert Steven Rittvo be added to Bwin.Party's existing nine-strong board.
A Bwin.Party spokesman on Monday said SpingOwl's comments were focused on selective points of history and Bwin.Party continues to recommend that shareholders vote against the proposal.
"SpringOwl has failed to offer any concrete proposals for creating long-term value for shareholders and also demonstrates a complete failure to understand the impact of the industry's inevitable transition towards nationally regulated and taxed markets," the company said.
Activist investors push for change at businesses they believe are undervalued and can provide better shareholder returns through a change in strategy or management. Ader, a former Wall Street gaming analyst, battled with U.S. slot-machine maker International Game Technology last year, winning a board seat for his firm.
Ader has said that the four new directors he wants elected to Bwin.Party's board would provide significant expertise in online gaming, technology and U.S. banking systems.
Bwin.Party has said it does not have sufficient information or time to review the suitability of each candidate and that it does not consider it to be in the interest of the company and investors for a shareholder with a stake of 5.25 percent to nominate so many directors.
In March, the company posted a 35 percent drop in full-year earnings to 108 million euros ($149.75 million) because of falling revenue, increased gaming taxes in Germany and start-up costs in New Jersey.
(Reporting by Neil Maidment; Editing by Louise Heavens and David Goodman)