Furniture Brands says proxy fight "disruptive"
ATLANTA (Reuters) - Furniture Brands International Inc <FBN.N> said on Monday that a proxy fight proposed by Sun Capital Securities LLC, a major shareholder that has shown interest in acquiring the U.S. furniture maker, would be a costly distraction.
Shares of Furniture Brands were up more than 10 percent in afternoon trading.
The St. Louis maker of Broyhill, Henredon and Thomasville furniture brands acknowledged receiving a letter from Sun Capital demanding its stockholder list. Sun Capital, which expressed interest in buying Furniture Brands in February, said in a regulatory filing last week that it plans to nominate candidates to the company's board.
"We are disappointed Sun Capital is considering pursuit of a costly and disruptive proxy contest," Furniture Brands said in a statement. "A proxy contest can only serve as a distraction to the company when attention and resources would be better used in creating value for stockholders by implementing our strategic plan."
Furniture Brands also said its board had concerns about the buyout interest from Sun Capital, including the private equity firm's performance record in the home furnishings industry.
Since Sun Capital, which holds about 9.45 percent of Furniture Brands' outstanding shares, had substantial positions in other furniture retailers, giving it access to data about its strategy could hurt Furniture Brands' competitive position, it said.
Furniture Brands also said Sun Capital had a "mixed record of performance" in furnishings. It said a number of Sun Capital's furniture investments were currently in bankruptcy, including a company which owes Furniture Brands more than $2 million.
Furniture Brands is closing stores, consolidating administrative functions and taking other steps to turn around its business as the U.S. housing slump hurt sales.
Under new Chief Executive Ralph Scozzafava, Furniture Brands has sold its business furniture division and launched an Asia unit to reduce costs. It recently filled some vacant management posts.
Furniture Brands shares were up $1.15, or 10.2 percent, to $12.43 in afternoon New York Stock Exchange trading. The stock has fallen 22 percent in the past year.
(Reporting by Karen Jacobs in Atlanta and Aarthi Sivaraman in New York, editing by Gerald E. McCormick)