Word: coniston
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Dates: during 1980-1989
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...attacks on Allegis from all sides. Its pilots were pressing to buy the airline because they felt Ferris was spending too much time and money buying hotels, to the detriment of the company's core business. Meanwhile, dissident shareholders, led by a trio of Manhattan-based investors called Coniston Partners, launched a campaign to oust management, arguing that the company would be worth far more if it were broken into pieces and sold. The critics pointed to the firm's lackluster financial performance: its net income was only $11.6 million last year on revenues of $9.2 billion, and the airline...
...management was New York City Developer Trump, who bought just under 5% of the company's stock and hinted that he might join in the pilots' takeover effort. But Trump sold his stake in the airline for a reported profit of $55 million. In the meantime, the little-known Coniston Partners had been quietly amassing shares, and suddenly emerged as Allegis' largest shareholder. Brandishing a 13% stake in the firm, the partnership announced its intentions to overthrow the Allegis board, name its own slate of directors and sell off the company piece by piece...
...threat that Allegis could not take lightly. Coniston Partners has been terrorizing companies ever since 1982, when it was formed by Investors Augustus Oliver, 37, Paul Tierney, 44, and Keith Gollust, 42, who together put up an original investment of only $3 million. The partners have rung up more than $100 million in profits since, by forcing restructuring plans and boosting stock values at Cyclops, Storer Communications, NL Industries, Viacom International and Gelco. Nonetheless, the three men still take the New York City subway to work every morning, avoiding limousines and other costly perks. Says Tierney: "We preach leanness...
...provisions, the company would take on more than $3 billion in additional debt and then give stockholders a $60 cash payment for every share they owned. Company officials apparently believed the huge new debt would make Allegis a less attractive takeover target and that the cash payout would placate Coniston and other restive shareholders. They were wrong. The pilots still talked takeover, and Coniston pressed forward with its proposal to break up the company, maintaining that Allegis stock, then hovering in the 80s, remained undervalued...
...Coniston was less than impressed with Allegis' move. Said Partner Augustus Oliver: "We are currently evaluating it." Translation: a further battle is possible. Allegis stock, meanwhile, closed the week at 86 1/2, up 15 from the previous week. Said Robert Joedicke, an airline analyst for the Shearson Lehman Bros. investment house: "Like a soap opera, this isn't going to be decided tomorrow...