AIM-listed activist investors Crystal Amber are backed by top fund manager Neil Woodford, who holds 16% of the business.
Crystal Amber targets companies with unrealised, hidden or trapped value. It actively engages with the company to push for the outing of this value to benefit shareholders and Sainsbury's (LSE: SBRY), Pinewood Group(LSE: PWS) and Johnston Press (LSE: JPR) are three companies where Crystal Amber has identified considerable potential.
Just over a year ago, the Telegraph reported that Crystal Amber was in talks with international activist investment groups about engineering a major shake-up at Sainsbury's.
Crystal Amber believed that flushing out a bid for Sainsbury's from a large international retailer could realise significant shareholder value. In the absence of a takeover, another option was to push Sainsbury's to sell off a chunk of its property, which Crystal Amber reckoned could allow as much as £2.25bn (117p a share) to be returned to shareholders.
Whether Crystal Amber got as far as opening a position in Sainsbury's isn't known. What we do know is that the grocer has gone in the opposite direction to a takeover with a proposed £1.1bn acquisition of Argos owner Home Retail.
Often shareholders of a company that's taken over end up doing better than the shareholders of the company making the acquisition. That may be the case with the Sainsbury's gambit. Argos doesn't appear a natural fit, and the acquisition has the air of a company that feels it needs to do something in response to the structural shift in UK grocery.
Local newsgroup Johnston Press has been struggling in the face of the print industry decline that it's trying to manage by retaining stronger print titles and pursuing digital growth.
Crystal Amber upped its stake in the company as recently as 1 February, fortuitous timing because on 3 February Johnston announced that a reassessment of its pension plan liabilities had reduced the scheme deficit by £53m from £90m.
However, a week later Johnston announced a proposed "transformational acquisition" of the i newspaper for £24m. The board claims i will be a "strong strategic fit" and that the acquisition has met with a "positive reaction" from shareholders. I'm unconvinced by the strategic fit and why an activist investor would see merit in this acquisition, if indeed Crystal Amber does.
Crystal Amber first invested in AIM-listed Pinewood some years ago, in the belief that the iconic brand and technical excellence should have enabled it to deliver higher profitability. The activists have been a thorn in the side of chairman Michael Grade and chief executive Ivan Dunleavy on and off since.
The board's aim of achieving a main market listing has been thwarted by a tightly-held shareholder register and last week came an announcement that: "The Board has now determined that it is appropriate to evaluate alternative opportunities to maximise value ... which could include a sale of the Company".
Pinewood's shares jumped on the news and are trading at 530p as I write, valuing it at just over £300m. There could be further upside. Analysts value the business at £315m to £350m, and there's potential for a bidding war with high interest expected from Chinese and US investors.
Crystal Amber has done well from identifying special situations for outing shareholder value (Aer Lingus and Thorntons have been notable recent successes) and Pinewood could be another.
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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.