In the continuing trend of small-cap proxy contests in Canada,
Aberdeen International mounted a successful defense to activist
investor Meson Capital Partners' aggressive and highly
In December 2014, Aberdeen, a $14 million market cap company
with a portfolio of investments in junior mining companies, was the
subject of a proxy fight initiated by Meson Capital, a San
Francisco based hedge fund and owner of approximately 5% of
Aberdeen's shares. Meson Capital was critical of a number of
alleged related party transactions involving Aberdeen and entities
associated with its Chairman and CEO. Meson Capital also criticized
Aberdeen's allegedly "lavish" compensation practices
at a time when the company was experiencing losses and declining
On December 19, 2014, the Globe & Mail announced that Meson Capital filed a complaint
to the Ontario Securities Commission regarding a private placement
of stock and warrants to Sulliden Mining Capital Inc. and other
parties. In January 2015, Meson Capital and Nightscape Capital LLP,
which held 3.5% of Aberdeen's shares, commenced a court
application seeking to prevent the privately placed shares from
being voted at the special meeting that Meson Capital had
requisitioned to replace Aberdeen' board.
On February 2, 2015, after proxy results demonstrated
shareholder support for Aberdeen's incumbent board, Aberdeen announced that Meson Capital and Nightscape
had withdrawn their dissident slate, taken steps to dismiss their
court application, and agreed to a five-year standstill.
Meson's President also issued an apology to Aberdeen's
The Aberdeen battle is a reminder that it is possible for a
well-organized target to mount a successful defense against an
aggressive activist attack. It also highlights the risk of
activists challenging corporate actions and that boards need to be
prepared to justify their decisions to maintain shareholder
support. Moreover, this case demonstrates the importance of
managing and minimizing the negative publicity that can result from
a proxy battle, even where the target company is ultimately
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