Shorts (right)
As investor calls for sale, Helen of Troy unveils big stock buyback
Helen of Troy has suggested it would return money to investors, but it wasn’t interested in selling itself, despite calls from an activist investor.
Then on Monday, the consumer products company unveiled a doozy of a shareholder-payout program.
Helen of Troy said it would buy back $550 million worth of its shares over the next three years, to be financed by cash on hand and loans. It will begin with a $300 million tender offer starting immediately.
The buyback is huge, representing nearly 29 percent of the company’s outstanding stock. But it isn’t clear whether Sachem Head Capital Management, the hedge fund looking to shake up the consumer products maker, will find it enough.
In a letter sent last week, Sachem Head argued that the company — which owns housewares maker OXO International and produces products for brands like Revlon and Dr. Scholl’s — should consider selling itself, given what the hedge fund said was interest from a number of potential suitors.
Helen of Troy responded that it believed its shares were undervalued, and that its board had taken a number of steps that addressed Sachem Head’s complaints on matters including executive compensation and a succession plan for chief executive.
But Sachem Head also suggested that if the company wouldn’t sell itself, it should consider taking on debt to finance buybacks or special dividends.
What Helen of Troy announced Monday hews pretty closely to that alternative, though the company noted that it said last year that it would return capital not earmarked for strategic acquisitions to shareholders.
“Utilizing our strong balance sheet to fund a significant share repurchase provides immediate and continuing benefits to shareholders and underscores our confidence in the company’s current strategy and future growth potential,” Timothy F. Meeker, company chairman, said in a statement.
It isn’t clear whether Sachem Head, whose founder is a protégé of veteran activist investor William A. Ackman, will be appeased by the plan. A spokesman for the hedge fund declined to comment.
Other investors seemed pleased, however. Shares in Helen of Troy traded near all-time highs Monday afternoon at $63.56, up 7 percent for the day.
—Michael J. De La Merced, The New York Times
Bitcoin exchange struggles: Mt. Gox experiences severe setbacks
A major player in the Bitcoin universe was struggling to stay alive Monday, raising questions about whether there is a fundamental flaw in the computer program that underlies the virtual currency.
The price of Bitcoin has fallen sharply, to below $600 for a single Bitcoin from more than $800 a week ago.
Mt. Gox, a Japanese company that was previously the largest Bitcoin exchange in the world, halted all customer withdrawals late last week.
On Monday, the company said its problems were caused by a previously undetected glitch in the basic Bitcoin protocol that made it possible for users to falsify transactions.
Gavin Andresen, the chief scientist at the Bitcoin Foundation, disputed Mt. Gox’s account and said the problem was at the Japanese exchange.
“The issues that Mt. Gox has been experiencing are due to an unfortunate interaction between Mt. Gox’s highly customized wallet software, their customer support procedures, and an obscure (but long-known) quirk in the way transactions are identified and not due to a flaw in the Bitcoin protocol,” Andresen said in a statement.
The price of Bitcoin recovered a bit Monday morning, rising to nearly $650.
Mt. Gox has been struggling for months to process transactions, leading many customers to take their business to other exchanges that have vaulted past Mt. Gox in popularity.
But Mt. Gox’s claims were taken seriously because, if true, they raise basic questions about the soundness of the Bitcoin experiment, which has swept the technology and finance world over the last year, taking the price of a single coin up more than 3000 percent.
From the creation of Bitcoin in 2009, one of the most important and vaunted features of the Bitcoin program was its ability to prevent the same coins from being moved to two different places at the same time.
In its announcement Monday, Mt. Gox said that a bug in the Bitcoin software made it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a Bitcoin transfer had not occurred when, in fact, it had.
The company said: “We have discussed this solution with the Bitcoin core developers and will allow Bitcoin withdrawals again once it has been approved and standardized.”
Other exchanges did not report similar problems, but none of the biggest companies immediately put out a response.
Beyond Mt. Gox, Bitcoin users have been rattled by several setbacks in recent days.
On Friday, the Russian government said Bitcoin transactions were illegal. They joined the Chinese government, which said in December that financial institutions in the country could not participate in Bitcoin transactions.
Florida prosecutors, meanwhile, arrested people Friday who had met to exchange Bitcoins for dollars, the first such arrests.
U.S. authorities have generally given a tentative blessing to the Bitcoin experiment. But they have warned consumers about the dangers and the problems that could still pop up.
—Nathaniel Popper, The New York Times