Elliott Approaches Cubic About Deal; Firm Adopts Poison Pill (1)

Cubic Corp. adopted a poison pill after being approached by Elliott Management Corp. about a potential takeover of the transportation and defense systems and services provider.

The company said in a statement Monday that the hedge fund has informed Cubic that it owns a 15% stake in the company, and is interested in acquiring the remainder of the company along with a private equity partner, subject to certain conditions. Cubic’s board has not initiated a sales process and believes its standalone prospects are excellent, it said. Elliott has not made a formal offer to acquire the company.

“Cubic’s board is committed to creating long-term value and ensuring that our shareholders are able to realize the full potential of their investment in the company,” said David Melcher, lead independent director of Cubic.

Cubic rose 28% to $56.80 at 11:37 a.m. in New York, giving the company a market value of about $1.8 billion.

Elliott has engaged in talks with the company over the past several weeks about a potential takeover, the firm said in a statement Monday.

While the firm was disappointed the company made those discussions public, it said it was pleased it acknowledged its fiduciary duty to engage.

“We are fully prepared to acquire Cubic and look forward to immediate engagement with the company,” Elliott Partner Jesse Cohn and Portfolio Manager Mark Steinberg said.

A representative for Cubic declined to comment beyond the statement.

Melcher said the poison pill, also known as a shareholder rights plan, will give the board time to make an informed decision. It will also prevent any third party from obtaining control of the company in a manner and at a price that aren’t in the best interest of shareholders, he said.

The poison pill would cap any new investors from building a position greater than 15% in the San Diego-based company, and prevents any holders that own 15% or more from building on their position.

Cubic said it doesn’t prevent the board from considering any fair offers for the company, and that it would do so if one was presented.

Elliott, run by billionaire Paul Singer, is primarily known as an activist investor but has branched into private equity in recent years. It has acquired several companies, including bookseller Barnes & Noble Inc. last year, and technology companies like Travelport Worldwide Ltd., and Gigamon Inc.

Earlier this month, Elliott disclosed that it had entered into advanced talks to acquire Swiss baking company Aryzta AG, which makes Otis Spunkmeyer cookies and supplies buns to McDonald’s Corp.

(Updates with Elliott statement in paragraph five)

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Matthew Monks

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