Newell Brands Inc. delivered a letter to Starboard Value and Opportunity Master Fund Ltd. from its board of directors addressing many of the activist hedge fund’s concerns.

The letter comes after Newell Brands on March 19 appointed four directors picked by billionaire investor Carl Icahn to its board, the consumer goods company announced Monday. Icahn, who owns about 6.9% of Newell’s shares, agreed to vote in favor of Newell’s nominees for directors at an upcoming annual meeting.

The following day, four of Starboard’s nominees to Newell Brands Inc’s board of directors withdrew their nominations. They included three former Newell Brands’ directors, Ian Ashken, Domenico De Sole and Martin Franklin, as well as James Lillie.

The full text of the letter follows:

Starboard Value and Opportunity Master Fund Ltd.
Attention: Jeffrey Smith, Chief Executive Officer & Chief Investment Officer
777 Third Avenue, 18th Floor
New York, NY 10017


The newly reconstituted Board of Directors (the “Board”) of Newell Brands Inc. (“Newell Brands” or the “company”) has reviewed and considered your most recent public statements.

We believe the events of the last few months have helped lead to significant positive change at Newell Brands. The company’s shareholders will benefit from these changes, which include a nearly total refreshment of the Board and the development of an expanded accelerated transformation plan (the “Accelerated Transformation Plan”). The new Board is focused and committed to both driving the Accelerated Transformation Plan into action and reigniting performance of the remaining core business, which we believe will be tremendously valuable for shareholders.

To that end, we share many of your perspectives, and we thought it would be helpful to highlight how the company’s recent actions align with your views.

Starboard Statement: As we have consistently stated, we believe that considerable change to the composition of Newell’s Board of Directors (the “Board”) and leadership is required. Since our involvement, eight of the 11 Board members will be new, including a new Chairman.

Response: The new Board agrees. The appointment of Patrick Campbell as Chairman of the Board brings new leadership to the company. In addition, the overall composition of the Board has fundamentally changed in the last three months. Since the beginning of 2018, nine directors have left the Board and six new directors have been appointed, each of whom has exceptional experience and a proven track-record as a shareholder-centric leader. In addition, two new independent directors will be nominated for election to the Board at our upcoming Annual Meeting. The refreshed and newly-focused Board is comprised of a strong, seasoned group of leaders that will provide enhanced oversight and demand increased accountability.

Starboard Statement: We believe that asset sales, if executed properly, can create substantial value at Newell. Given that Newell intends to now explore asset sales for approximately half of the company, we believe that the most prudent course of action is for the company to work with its financial advisor to evaluate a comprehensive set of strategic alternatives for all of the businesses. Only following this thorough analysis can Newell prudently determine which assets may realize the greatest after-tax value, and decide which assets, if any, the company should continue to operate.

Response: The new Board agrees. Asset sales can create substantial value at Newell Brands, which is why the new Board unanimously embraced the Accelerated Transformation Plan. The new Board’s Finance Committee is now chaired by Courtney Mather, a portfolio manager at Icahn Capital, and is charged with overseeing the asset dispositions at the heart of the Accelerated Transformation Plan. Under the Finance Committee’s oversight, the company’s financial advisors and management are already hard at work evaluating a potential first wave of divestitures. As part of this initial step in the Accelerated Transformation Plan, the Finance Committee will both (i) review and assess the value-creation and strategic rationale for each potential asset sale (and each potential alternative thereto) and (ii) conduct a comprehensive review of all of the company’s businesses to determine which brands should be included in a second wave of divestitures and which should be retained. The new Board’s decision-making throughout this process will focus on two priorities: maximizing after-tax proceeds and creating a simpler, leaner and more profitable Newell Brands.

Starboard Statement: In addition to asset sales, we are of the belief that there is an opportunity to significantly improve the operations at Newell. Based on our research, we are confident that there is an opportunity to improve operating income by approximately $500 to $800 million based on actions that should be within management’s control. We believe it is important that, in addition to exploring strategic alternatives for all of the businesses, the new Board be equally and simultaneously focused on the operational improvements available to the company. Asset sales on their own are not a panacea for operational issues.

Response: The new Board agrees. Asset sales are only one component of the Accelerated Transformation Plan. There is also tremendous opportunity to improve the operations at Newell Brands, and the new Board is equally focused on that component of the Accelerated Transformation Plan. In fact, the new Board is committed to identifying and realizing reported operating income improvements of at least $800 million over the next three years, including a minimum of $300 million in 2018. The new Board is also committed to clearly communicating to shareholders how the divestures in the Accelerated Transformation Plan will ultimately impact these targeted operating income improvements on a pro forma basis.

In light of these most recent changes, and after having additional discussions with some of the company’s largest shareholders, we believe Newell Brands is now embarking on a path to significant value creation. To that end, the new Board’s singular focus at this time is devising, articulating and executing the multi-year strategic transformation and operational turnaround that will once again make Newell Brands a best-in-class consumer products company that delivers outstanding returns. We are pleased to know that this focus is consistent with Starboard’s perspective as well.

Best regards,

The Board of Directors of Newell Brands Inc.

Newell Brands portfolio includes Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Coleman, Jostens, Marmot, Rawlings, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Rubbermaid, Contigo , First Alert, Waddington and Yankee Candle.