By Svea Herbst-Bayliss
– Newpark Resources, a provider of drilling fluids systems and composite matting systems used in oilfields, is being pushed by an activist investor to separate its industrials systems and fluids business, according to a letter seen by Reuters.
Bradley Radoff, a private investor who previously worked as a portfolio manager at Daniel Loeb’s Third Point hedge fund, has approached Newpark’s board and is pushing for the split. He argues that the two segments lack synergies, appeal to different investor bases and boost excessive corporate costs.
“The Company’s own disclosures and investor presentations highlight that the Industrial Solutions segment is a high-margin business on a growth trajectory, while the Fluid Systems segment is an unprofitable business operating at the opposite end of the energy transition spectrum,” Radoff wrote to the board.
“Newpark’s board and management team are highly focused on creating shareholder value as we execute on our strategic priorities, particularly the expansion and diversification of our Industrial Solutions business,” a spokesperson said.
The spokesperson added that the company already said that it hired JPMorgan Chase to review its portfolio and evaluate alternatives. The company also said it values shareholder input and hopes “to have continued constructive dialogue with (Bradley Radoff).”
Newpark undermines its ability to have “a credible environmental, social and governance story” by keeping the two segments together, Radoff wrote. A majority of Newpark’s board members are oil and gas industry veterans.
The company’s stock price closed at $2.72 on Monday. Five years ago, the stock was trading at $7.80.
Radoff, who sits on independent energy company VAALCO Energy’s board and has successfully pushed for changes at Tetra Technologies, where the company agreed to add a diverse director and appoint a new chairman, is urging Newpark to split at a time a number of other companies are breaking apart.
(Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler and Cynthia Osterman)