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CST shareholder sends hard-hitting letter to its board

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Corner Store

CST Brands unveiled a brand overhaul last month for its Corner Store chain of convenience stores. Express-News file photo.

A hedge fund that owns stock in CST Brands sent a hard-hitting letter to its board of directors on Wednesday listing complaints about the company’s growth strategy and musing whether it should be put up for sale.

Engine Capital LP, a New York-based fund with about 1 percent of CST’s stock, cites the company’s “poor stock performance” and takes aim at the acquisition strategy it has pursued since splitting from Valero in 2013.

Local-based CST, which runs the Corner Store chain of convenience stores, is at a disadvantage to rivals such as Speedway and Sunoco in the acquisition game, Engine Capital says in the letter, because those companies are more productive earners, allowing them to make higher offers.

“These better operators can squeeze more profits from their targets and can therefore afford to pay more, which make them the natural consolidators,” the letter says.

The letter lays out two options for CST: improve its business operations or move to the other side of the acquisition table.

CST didn’t respond to a request for comment on Wednesday afternoon.

Engine Capital has sent similar letters to other companies, including one on Tuesday to MYR Group Inc., an Illinois-based electrical construction contractor.

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