Omnova reaches settlement with activist investor

Beachwood, Ohio — Omnova Solutions Inc. has reached a truce in its battle with activist investor Barington Capital Group LP.

The Beachwood-based firm and the New York-based investor said that three new directors — two nominated by Barington and one by Omnova — would be supported by Barrington at Omnova’s upcoming annual meeting. These new positions are in addition to three board members already up for re-election.

No date has been set for this year’s annual meeting.

The Barington nominees are James Mitarotonda, the firm’s president and CEO, and Joseph Gingo, former CEO of A. Schulman Inc., a plastics firm that similarly was challenged by Barington several years ago.

The new Omnova nominee is Janet Giesselman, who has more than 30 years of petrochemicals experience with Dow Chemical Co. and Rohm & Haas Co.

“We value input from our shareholders and believe this agreement with Barington is in the best interests of the company and all Omnova shareholders,” Kevin McMullen, Omnova chairman, president and CEO Kevin, said in a statement.

Mitarotonda added in a statement that Barington officials “are pleased to have reached an agreement with Omnova, and we look forward to working together…to enhance long-term value for all Omnova shareholders.”

McMullen, Homax Corp. CEO Larry Porcellato and former A. Schulman executive Robert Stefanko also are up for re-election to the Omnova board.

The new slate does not include management consulting veteran Javier Perez, who previously had been nominated by Barington.

The agreement also calls for standstill restrictions which would limit further challenges from Barington. Industry sources said these restrictions will be in place for two years.

Barington — which owns more than 2 percent of Omnova stock — had criticized the firm for alleged financial underperformance. Omnova’s 2014 sales fell 3 percent to $987 million (€873 million), while its profit fell more than 40 percent to $11.5 million.

Barington previously had suggested that Omnova’s Engineered Surfaces unit — which generates about 25 percent of the firm’s sales — be sold. Stock analyst APB Financial Group agreed with that recommendation in a 30-Jan report, saying that the unit “is currently not operating at optimal,” and as a result might have to be sold at a discount.

New York-based APB also said that Barington “is not what we refer to as a ‘hit and run’ activist, and instead has history of working with companies over multi-year periods.” APB also praised Omnova’s recent hiring of former Schulman chief financial officer Paul Desantis and former Chemtura Corp. executive Anne Noonan. Desantis was at Schulman during Barington’s involvement there.

Omnova produces emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial and residential end uses. The firm employs 2,300 at 23 locations worldwide.