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Tom Sandell now an activist in the next great platform company

Tom Sandell of Sandell Asset Management is back at it, targeting Viavi Solutions (NASDAQ: VIAV) the $1.3 billion market cap network service solutions provider for the telecommunications space. 

The company was a small position for Sandell in 2Q - owning 1.4 percent of the company. He increased his stake fourhold and now owns 5.5 percent. The interesting thing is that this is now his second largest equity holding, behind Bob Evans and ahead of Brookdale Senior Living. 

Per Sandell's letter [here], he has some demands to help get the company back on track, including: 

  • Refreshing and materially enhancing the quality of Viavi’s Board of Directors;
  • Conducting a thorough review of strategic alternatives;
  • Retaining an independent financial advisor and operational consulting firm; and
  • Identifying a new management team with the experience necessary to maximize the value of the Company’s deferred tax assets, which include its $4 billion to $4.5 billion of federal net operating losses (NOLs).

The big standouts are monetizing its NOLs and a strategic review to get the compnay sold - in that case the value is $10 to a buyer or $12 if it using its NOLs (effectively becoming a platform company). Sandell cites examples of paltform companies as Jarden Corporation (NYSE: JAH), Platform Specialty Products Corporation (NYSE: PAH), and Nomad Foods Limited (LSE: NHL). 

The key, though, is to get a CEO that can Viavi into a platform company - something he thinks he can help with.