Steel Partners Activism Efforts at United Industrial, Ronson, and BKF Capital: The Good, the Bad, and the Ugly

Abstract

We examine Steel Partner’s investments and shareholder activism at three firms, United Industrial Corp (the Good), Ronson Corp (the Bad), and BKF Capital (the Ugly). The cases suggest the following points. For managers and boards wishing to maintain their independence the lesson is to dig in and refuse to negotiate, preferably while maintaining a big ownership stake. However, forcing the activist to go hostile might not be a great idea as it might lead to a lawsuit or an insatiable wolf-pack type campaign. For the activists, patience can be a virtue. However, do not let the desire for “success” come at the expense of profitability. Success was achieved at BKF and was probably a quixotic venture at Ronson. In both cases, Steel Partners lost a great deal of money and experienced opportunity costs. In contrast, Steel involvement at UIC can be seen as a model of successful activism, both in terms of achieving goals and making a substantial profit.

Keywords: Shareholder Activism, Hedge Fund

JEL Classification: G34