--Trian throws support behind Lazard's strategic plan
--Friendlier approach than campaign launched last year regarding
State Street
--Trian sees Lazard shares doubling by 2014
(Updates to add closing share price.)
By Liz Moyer
Nelson Peltz's Trian Fund Management LP has amassed a 5.1% stake
in Lazard Ltd. (LAZ), calling the shares "significantly
undervalued" and throwing support behind a strategic plan outlined
earlier this year by Lazard's management.
With the stake, disclosed in a securities filing Monday, Trian
becomes Lazard's biggest outside shareholder, leaping over Ariel
Investments (4.96%) and Marathon Asset Management (4.32%),
according to FactSet.
Trian and Lazard management had met several times prior to
Monday's announcement to discuss Lazard's business and strategies
to enhance shareholder value, Trian said in a statement Monday.
In its own statement Monday, Lazard said, "Trian Partners are
experienced and successful investors, and we appreciate their
confidence in Lazard's franchise and strategy."
Shares of Lazard closed up 5.02% to $24.25, down 7.12% for the
year to date.
In a presentation Trian prepared about Lazard's prospects, Trian
projects Lazard could earn more than $3.50 a share in 2014,
implying a doubling of the current share price.
It is a markedly more friendly approach than some of Trian's
other investment activities. Last year, the activist investor
launched a campaign to push State Street Corp. (STT) to change its
business model, including a spinoff of its investment management
division. State Street management has said it isn't interested in
spinning off the business, saying it fits well with the firm's
other main business, which is asset servicing.
Trian, which owns about 6.3 million Lazard shares, said in its
statement Monday that Lazard had attractive, low capital-intensive,
fee-based businesses "positioned to be a natural beneficiary of
long-term financial market trends."
It said it believes the bank's shares are "significantly
undervalued," adding it supports Lazard's new strategic plan, which
focuses on margin improvement, capital allocation and improved
corporate governance.
In April, Lazard reported its first-quarter net income fell 54%
on costs tied to cutting staff, yet the investment bank posted a
core profit and revenue that easily topped expectations on stronger
demand for deal-making advice. It recently named former Citigroup
Chairman Richard Parsons to its board and has said it will add
another outside director by the end of the year.
In a slide presentation, Trian noted that the financial crisis
had forced big banks to slash compensation costs, prompting a
flight of bankers to independent firms like Lazard.
Lazard is bigger than its other so-called boutique rivals
Evercore Partners (EVR) and Greenhill & Co. (GHL). Its advisory
revenue last year was $992 million, versus $421 million for
Evercore and $293 million for Greenhill, according to Trian's
presentation. It ranked sixth among firms in global advisory fees
last year, with a 9% share, behind Goldman Sachs Group Inc. (GS),
J.P. Morgan Chase & Co. (JPM) and other large banks.
Evercore, run by ex-BlackRock President Ralph Schlosstein and
founded by ex-Treasury official and longtime banker Roger Altman,
had a bit of a run-in with its own shareholders at its annual
meeting earlier this month. More than half--57%--voted against a
proposal to increase the firm's stock incentive compensation by 11
million shares. Had the proposal passed, it would have added to the
20 million shares of common stock Evercore has available for pay
awards under its 2006 incentive plan.
Write to Liz Moyer at liz.moyer@dowjones.com
--Nathalie Tadena and Brett Philbin contributed to this
article