Investor Marathon Partners Equity Management is going to force the manufacturer of beauty cosmetics e.l.f. Beauty Inc to begin the process of selling or to refocus on core operations and cut costs, reports the Wall Street Journal.
Guide Marathon believes that branded cosmetics e.l.f. and its platform for rapid development of new products can attract potential buyers. In addition, the hedge Fund from new York has stated that a private company TPG, which owns almost 30% of e.l.f. and has three representatives on the Board of Directors, too much influence on the activities of the cosmetics company. In Marathon want new Directors who are not affiliated with TPG, have become part of the Board, reports the Wall Street Journal.
According to Thomson Reuters, Marathon is the fourth-largest shareholder in e.l.f. from 8.54 % stake. e.l.f. Beauty, which has a market capitalization of $ 637,6 million U.S. dollars, lost nearly 40% of its shares on the new York stock exchange this year.
At the end of this week, Marathon Partners Equity Management sent an official letter to the Director-General e.l.f., Tarango Aminu, called for by the Board of the company to consider strategic alternatives, including a significant reduction in operating costs (including the salary of managers) or the potential sale of the company.
Mario Cibelli of Marathon Partners Equity Management, commented on the current situation: “E. L. F. has created a valuable platform that helped the main brand to remain in close contact with consumers and stand out performance space for retail partners. We applaud the management team for this success, but we are confident that our appeal to significant changes in the company is correct and timely. e.l.f. cosmetics carries a big load, covering all overhead for a platform designed to support multiple brands and an extremely generous compensation plan for senior executives”.
According to Mr. Cibelli, the above financial burden adversely affects the shareholders, which is unacceptable and requires immediate intervention of the investors. The Board e.l.f. cosmetics at the moment has not commented on the situation.