NEW YORK, May 2 (Reuters) - Activist investor MMI Investments LP has demanded EMS Technologies speed up the sale of the wireless-communications products maker, and hire an independent special committee to run the process, according to a letter obtained by Reuters.
EMS announced strategic alternatives on April 19 after months of pressure by New York-based hedge fund MMI, which owns a 7.8 percent stake in the company. EMS said it had received enquiries from potential buyers. [ID:nL3E7FJ2G0]
In March, the activist nominated a slate of four directors to the board at EMS' next annual shareholders' meeting.
Norcross, GA-based EMS, which has a market capitalization of $387 million, said the same day it announced strategic alternatives that it would also be postponing its annual shareholders' meeting to June 30, 2011 from May 12.
In MMI's most recent letter to the company sent on Sunday, the fund criticized the current board's ability to manage its sales process given their "weak track record in M&A" and questioned the motivation behind postponing the annual meeting.
MMI also made several requests including the formation of an independent special committee to oversee the process; preparation of a detailed memorandum describing EMS's businesses such as a tax analysis to allow buyers to bid for all or part of the company; and the creation of a virtual data room to allow parties to complete due diligence.
"While we do not understand why it took the board seven months and significant expenses defending our election challenge over such issues, we are nonetheless pleased that the board has finally reached the same conclusion," MMI manager Clay Lifflander said in the letter dated May 2.
Analysts have said EMS could fetch 9 to 10 times EBITDA in the event of a sale, with a possible share price valuation of $30. EMS stock closed on Friday at $25.26.
EMS has four segments catering to the aviation, defense, global tracking and logistics markets.
Comtech Telecommunications Corp could be among the shortlist of possible buyers for the entire company, analysts have said.
The company's aviation business, which makes satellite aircraft communication products, could be attractive to companies like Rockwell Collins Inc , Honeywell International Inc , L3 and Northrup Grummen, according to analysts.
The LXE division, known for its hand-held and wearable computers for the logistics market, is more likely to be purchased by companies such as Motorola (MMI.N) (MSI.N), Intermap Technologies Corp or Honeywell, analysts have said.
An EMS spokeswoman was unavailable for comment.
Bank of America Merrill Lynch is advising EMS in its sale process, alongside King & Spalding LLP and Kirkland & Ellis LLP as legal counsel.