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Discovery Group Urges TESSCO Technologies to Hire an Investment Banker to Respond to Takeover Interest March 05, 2010 09:52 AM Eastern Time CHICAGO--(EON: Enhanced Online News)--In a letter to the Board of Directors of TESSCO Technologies, Inc., the Company's largest non-management shareholder, Discovery Group disclosed that it has been advised by several third parties that attempts to contact the management at TESSCO to discuss a potential acquisition of the Company have been met with a lack of constructive response. Discovery Group owns 14.2% of TESSCO’s stock and believes that the Board should hire an investment banker to coordinate a professional response to these inquiries and evaluate their merits. In an addendum to its letter, which was filed with the Securities and Exchange Commission, Discovery provides a summary of its analysis that suggests that the improvement in shareholder value in a change-of- control transaction could be substantial relative to the price of TESSCO shares today. The letter points out what Discovery believes to be several relevant governance flaws at TESSCO, including the Board’s adoption of a poison pill in the face of a potential takeover threat by one of the Company’s competitors. Other concerns expressed by Discovery, such as staggered director terms, a low level of director investment in TESSCO stock, missed operating targets, excessive management and director compensation are all elements of a culture of management entrenchment that Discovery argues subverts the interests of the non-management, public shareholders. Dan Donoghue, a Managing Partner at Discovery said, “It is unfortunate that a high-quality business, in a robust industry, with exceptional employees and strong customer relationships must bear the stain of such poor stewardship of investor resources.” Discovery states in its letter that the investment manager plans to withhold its votes for Mr. Dennis Shaugnessy and Mr. Jay Baitler, directors whose terms are expiring at this year’s annual shareholder meeting, if they are re-nominated for election to the Board due to Discovery’s view that they have demonstrated a lack of regard for the interests of non-management, public shareholders. Discovery Group’s correspondence with TESSCO’s Board also states that it considers any expression of interest by third parties in acquiring TESSCO to be friendly and believes that other public shareholders would likewise want management to be responsive to such inquiries. It is only management’s rebuffing of expressions of interest, without appropriate consideration by disinterested directors, which Discovery finds to be hostile to the Company’s owners. Until the Board takes the corrective action of forming a Special Independent Committee and engaging an investment banker, Discovery Group said it will continue to make the Board aware of any opportunities to enhance shareholder value, including any expressions of interest from potential suitors that it learns are meeting resistance from management. About The Discovery Group Discovery Group is a merchant banking firm that manages private partnerships in highly specialized investment strategies and conducts corporate merger and advisory services. The business was founded in 2002 and is based in Chicago. Investors in these funds include several large university endowments, nationally-recognized charitable foundations and a variety of trusts, family offices and wealth advisors. Discovery’s corporate finance expertise extends to public and private companies in a broad range of industries. Contacts Meghan O’Callaghan The Discovery Group 312-265-9596 mocallaghan@thediscoverygroup.com Permalink: http://eon.businesswire.com/news/eon/20100305005559/en
