Battle for Creo attracts short-term investors

According to David Brown, Creo's VP of Business Strategy, 35 per cent of Creo shares have been transferred since the disaffected group announced its intention to topple the incumbent management and install turn-around specialist Robert Burton as CEO. He identifies the buyers as ‘arbitragers ‘– market professionals who buy shares for short-term turnaround profit. Creo shares have climbed 40 per cent since the management bid was announced.

Meanwhile both major blocs are mustering backroom support for the looming battle of the proxies, which will take place at an annual and special meeting of shareholders on February 10, 2005, a date previously selected for the annual general meeting. The Goodwood-Burton bloc is supposed to have approximately 5.96 percent of the outstanding shares of Creo.

In a letter sent to shareholders, the Creo Board maintained; "In our judgment, the best interests of all Creo shareholders are most effectively advanced by combining the business of the originally scheduled meeting and the business stated in the requisition in a single shareholders' meeting on February 10, 2005. As Creo announced on October 15, 2004, the Creo Board has established the Special Committee to evaluate the strategic alternatives available to Creo with the objective of enhancing shareholder value. This evaluation process, which is designed to identify the best way to enhance shareholder value, is expected to be completed during January 2005.

“We believe Creo's shareholders should have an adequate period of time prior to the shareholders' meeting to consider the outcome of the Special Committee's evaluation of strategic alternatives. Therefore, holding one shareholders' meeting on February 10, 2005 offers Creo shareholders a proper and orderly way of selecting directors and serves to protect their right to make a fully informed decision on the future direction of the company. In addition, the February 10, 2005 meeting date permits Creo shareholders to consider Creo's audited financial results for the fiscal year ended September 30, 2004 and unaudited financial statements for the quarter ended December 31, 2004."

Creo management have questioned the suitability of Burton’s turn-around style of management for the technology company. His track record is based largely on his success in getting transactional printer, Moore Corporation, and commercial print company World Color into profit by cutting costs and selling assets.

Creo is not noted for being a company with much ‘fat’ in terms of personnel or operations, although its recent venture into plate manufacturing has left the management vulnerable to claims of ignoring shareholder value.