Investment fund Ancora Holdings is calling on the board of Harmonic to explore a possible sale and maximise shareholder value.
Earlier this year, Ancora, which owned 2.3 per cent of Harmonic’s stock in September, called on the company to divest its video business, but after a strategic review, Harmonic said “current market conditions” didn’t support a sale.
Now, Ancora is claiming Harmonic’s stock is trading “at a decreased multiple”, adding it has identified “issues with management’s investor communications, rather than fear of actual execution” as the reason for the low share price.
“The business has performed, innovation and product development have continued, spending on networks and upgrades have accelerated… but the stock has not followed,” added Ancora.
Ancora recommended a strategic review aimed at “a value-maximising sale” and suggested Ciena, a networking systems and software company, as a possible suitor. Harmonic chairman Patrick Gallagher sits on the boards of both companies.
“Acquiring Harmonic would be growth-, margin- and multiple-accretive, and deliver greater customer diversification and increased supplier power,” Ancora said.
Romanesque Capital, also a Harmonic shareholder, supported the call for a review aimed at a possible sale.
“We have long held high conviction in Harmonic’s market-leading products, valuable partnerships and disruptive innovation, having been invested since 2016,” the company said in a statement. “Despite these tailwinds, the company has been unable to realise value in its stock price.
