Investment funds affiliated with Marcato Capital Management and Oskie Capital Management are significant stockholders of Lear Corporation (the “Company”), with holdings together representing beneficial ownership of approximately 5.6 percent of Lear’s outstanding common equity. We share the view expressed in the Company’s press release of February 7, 2013 that the Company is undervalued, and we see what we believe to be a serious discrepancy between Lear’s improved operating performance and business prospects and its current market valuation. It is our view that this discount is directly linked to a questionable capital allocation strategy by the Board. Specifically, we believe the Company’s current undervaluation reflects investors’ distaste for the Company’s practice of stockpiling an increasing net cash balance, along with concern that the Company may be willing to make costly acquisitions or invest in other low-return projects at a time when the repurchase of Lear’s undervalued stock would be far more accretive to the long-term equity value of the Company.It is therefore no surprise to us that Lear’s stock is trading both at a significant discount to its peers, and well below its long-run historical multiple of 5.5X EBITDA.
Marcato Capital Management And Oskie Capital Management Outline Potential Value Creation Strategy For Lear Corporation
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