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

Managerial Finance, 2012

26 Pages Posted: 10 Oct 2009 Last revised: 20 Jan 2012

Timothy A. Kruse

Xavier University - Department of Finance

Kazunori Suzuki

Waseda University, Graduate School of Finance, Accounting and Law

Date Written: October 1, 2009

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

Suggested Citation

Kruse, Timothy A. and Suzuki, Kazunori, Steel Partners Activism Efforts at United Industrial, Ronson, and BKF Capital: The Good, the Bad, and the Ugly (October 1, 2009). Managerial Finance, 2012. Available at SSRN: https://ssrn.com/abstract=1485696 or http://dx.doi.org/10.2139/ssrn.1485696

Timothy A. Kruse (Contact Author)

Xavier University - Department of Finance ( email )

United States

Kazunori (Icko) Suzuki

Waseda University, Graduate School of Finance, Accounting and Law ( email )

4-1, Nihombashi 1 chome,
Chuo-ku
TOKYO, TOKYO 103-0027
Japan
+81 3-3272-6819 (Phone)

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