BARINGTON CAPITAL GROUP SENDS LETTER TO CHAIRMAN OF THE BOARD OF MATTHEWS INTERNATIONAL HIGHLIGHTING URGENT NEED FOR NEW LEADERSHIP
Rhea-AI Summary
Barington Capital Group, owning approximately 2% of Matthews International (NASDAQ: MATW), has sent a letter to the company's Board Chairman demanding immediate leadership changes and strategic reforms. The activist investor criticizes CEO Joseph Bartolacci's 18-year tenure, citing a 20.2% share price decline, increased debt, and poor capital returns.
Barington recommends several key actions: exploring divestiture of the SGK Brand Solutions segment, reviewing Warehouse Automation and Product Identification businesses, increasing cost reduction targets from $50M to $80M, and reducing debt. The investor has nominated three directors for the 2025 annual meeting and calls for declassifying the staggered Board.
Positive
- Company owns valuable Memorialization business with substantial market share
- Planned cost reduction initiatives of $50 million in progress
Negative
- 20.2% share price decline under current CEO's 18-year tenure
- Return on invested capital below company's cost of capital
- High indebtedness requiring reduction
- Poor performance of SGK Brand Solutions segment
- Underperforming Warehouse Automation and Product Identification businesses
News Market Reaction – MATW
In the trading session that priced this news, MATW gained 3.68%, reflecting a moderate positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Calls for Prompt Replacement of CEO Joseph C. Bartolacci Following 18 Years of Unacceptable Capital Allocation, Dismal Share Price Performance, Poor Execution and Excessive Spending
Believes Company Must Also Reduce Indebtedness, Explore Options to Divest Underperforming Businesses and Improve Corporate Governance to Unlock Trapped Value
Nominates Three Directors with Strong Boardroom Skills and Experience as Well as Proven Track Records of Creating Long-Term Value for Shareholders
James Mitarotonda, Chairman and CEO of Barington Capital, said, "Barington first invested in Matthews because we believed it was significantly undervalued and had the potential to deliver substantial, above market returns for its investors. We continue to believe this remains true and that the Company's Memorialization business is an exceptionally valuable asset with substantial market share and strong, long-term customer relationships. Unfortunately, however, under the leadership of CEO Joseph Bartolacci, the Company continues to meaningfully underperform and fall short of expectations.
"As a consultant to Matthews for the last two years, Barington has tried hard to work constructively with Mr. Bartolacci to reverse this underperformance. Despite our long track record of helping numerous companies unlock their potential, the Company has not demonstrated meaningful progress on any of the initiatives we suggested to improve its long-term performance. We are patient, long-term investors, but we can no longer accept the status quo. We strongly believe new leadership at the management and Board levels is required to ensure the value potential of Matthews can be unlocked. It is for this reason that we have nominated three highly qualified directors for election to the Board at the Company's 2025 annual meeting of shareholders."
In its letter, Barington recommends that Matthews take the following decisive steps:
- Focus its efforts on businesses where Matthews can create long-term shareholder value by exploring options to divest its poorly performing SGK Brand Solutions segment, following through with its strategic review of its Warehouse Automation and Product Identification businesses within its Industrial Technologies segment, and selling or identifying an experienced and well-funded industry partner for its emerging Energy Storage (dry cell lithium-ion battery) manufacturing business.
- Improve cash flow by increasing the amount of its cost reduction initiatives from
$50 million $80 million - Promptly replace Mr. Bartolacci, given his disappointing record during his extended 18-year tenure as CEO, during which time the Company's share price has declined by
20.2% , debt has increased and return on invested capital has fallen below the Company's cost of capital. - Strengthen the composition of its Board and its corporate governance by adding new, experienced directors with proven records of creating long-term value for shareholders, and declassifying its staggered Board.
Mr. Mitarotonda concluded, "Eighteen years of results speak for themselves. Matthews' shareholders deserve better. We are confident that with a new CEO, a more streamlined business, improved cashflow and a refreshed Board, Matthews can be a stronger, better capitalized company that generates substantial long-term value for all shareholders."
The full text of the letter can be found at: https://barington.com/matthews
ABOUT BARINGTON CAPITAL GROUP, L.P.
Barington Capital Group, L.P. is a fundamental, value-oriented activist investment firm established by James Mitarotonda in January 2000. Barington invests in undervalued publicly traded companies that Barington believes can appreciate significantly in value when substantive improvements are made to their operations, corporate strategy, capital allocation and corporate governance. Barington's investment team, advisors and network of industry experts draw upon their extensive strategic, operating and boardroom experience to assist companies in designing and implementing initiatives to improve long-term shareholder value.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Barington Companies Equity Partners, L.P. ("Barington"), together with the other participants named herein, intend to file a preliminary proxy statement and accompanying universal proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit votes for the election of Barington's slate of highly-qualified director nominees at the 2025 annual meeting of shareholders of Matthews International Corporation, a
BARINGTON STRONGLY ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS, INCLUDING A PROXY CARD, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the anticipated proxy solicitation are expected to be Barington, Barington Companies Investors, LLC ("Barington Companies Investors"), Barington Capital Group, L.P. ("Barington Capital Group"), LNA Capital Corp. ("LNA Capital"), James A. Mitarotonda, 1 NBL EH, LLC ("NBL"), Ana B. Amicarella, Chan W. Galbato, and Joseph Gromek.
As of the date hereof, Barington directly beneficially owns 563,962 shares of Class A Common Stock,
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SOURCE Barington Capital Group, L.P.