Mawson Infrastructure Group Inc. (NASDAQ:MIGI) saw its shares climb 7% on Tuesday after announcing a cooperation agreement with activist investor The Endeavor Investor Group that ends a prolonged governance dispute between the parties.
Under the terms of the agreement, Mawson will expand its board with five new directors. The slate includes three independent directors - Kyle B. Danges, K. Rodger Davis and Lisa R. Hough - alongside two nominees affiliated with Endeavor, Cody Smith and Phillip Stanley. The company said Ryan Costello, Kathryn Schellenger and Steven Soles will resign from the board, and that the changes are effective immediately.
The settlement brings to a close a lengthy campaign by Endeavor, which had built a substantial stake in Mawson and pursued actions intended to secure board control. Endeavor previously proposed a tender offer and put forward preferred equity financing that would have resulted in it holding control of the board.
In response to Endeavor's accumulation of shares, Mawson adopted a stockholder rights agreement in February designed to prevent further share purchases by Endeavor without shareholder approval. Endeavor countered in March by filing preliminary consent solicitation materials that sought to remove the entire existing board.
Commenting on the resolution, Ryan Costello, the departing chair of Mawson's board, said the board "unanimously determined that entering into an agreement with Endeavor is the best path forward for Mawson and in the best interest of all shareholders."
Joshua Kilgore, managing member of Endeavor Blockchain, LLC, stated that the investor group is "pleased to reach this agreement" and expressed confidence in Mawson's prospects, saying they believe the company "has the potential to become a valuable digital infrastructure platform" and that they look forward to contributing to value creation for shareholders.
The cooperation agreement also incorporates customary standstill provisions that limit further activist share purchases for the duration specified within the pact.
Context and immediate effects
The announced board changes and the terms described in the cooperation agreement conclude a period of mutual escalation that included both defensive measures by Mawson and active proxy and solicitation tactics from Endeavor. The near-term market reaction was a single-day 7% uplift in the company's share price.
What remains notable
- Five new directors join the board immediately, three of whom are independent.
- Three incumbent directors have stepped down effective immediately.
- The agreement contains standstill language that restricts further stock accumulation by the activist group during its term.