March 20, 2020 / 8:19 PM / in 8 days

Activist Blackwells settles with Colony, creates venture to buy stock

BOSTON (Reuters) - Real estate and investment firm Colony Capital Inc (CLNY.N) on Friday reached a settlement with Blackwells that hands the activist investor a fourth board seat and creates a new vehicle to buy Colony stock on the open market.

Colony said Jeannie Diefenderfer, an executive with technical and operational experience, will join its 12-member board.

In return Blackwells, which had been pushing to install five directors, has agreed to withdraw its slate, Colony and Blackwells said in a statement.

Most notably, the two sides agreed to create a joint venture that will aim to buy Colony stock and help prop up the company’s sagging share price.

On Friday, Colony’s share price jumped more than 13% to trade at $1.63 per share.

Like other companies, Colony’s stock price has come under pressure amid panic selling sparked by fears of the spread of the coronavirus. The share price has tumbled 66% in the last month.

The company, with a market capitalization of $716 million, said it will “commit $13.23 million in Colony common stock and/or cash, and Blackwells will commit $1.47 million in cash.” Colony will serve as the joint venture’s managing member and Blackwells will keep minority protections.

In early 2019, Blackwells and Colony agreed to give Blackwells two board seats and jointly agree on a third director later.

Blackwells has kept up the pressure on Colony since then, however, and in November called for Tom Barrack, a billionaire friend of President Donald Trump, to step down as CEO of Colony Capital.

Barrack had planned to leave the post in 2021 but will now leave sooner. Since Blackwells became involved with Colony, the company has cut costs, sold its industrial segment to Blackstone Group and pushed Kevin Traenkle to step down as chief investment officer last month.

Reporting by Svea Herbst-Bayliss; Editing by Tom Brown

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