A coalition of minority shareholders at Spanish retail group DIA has raised serious concerns about the company's lack of stakeholder engagement and how it has affected the business.
DIA’s market valuation has been in 'freefall' and the stock remains materially undervalued since LetterOne increased its stake in the company to 74.8% in 2019, the coalition said in a statement.
DIA has gone through significant transformation in recent years and recently reached a position of strength, with recent financial results reflecting improvements in all of its core markets.
Despite this positive performance, the company has made little effort to communicate its progress to potential investors, analysts and the broader market.
Areas Of Concern
Led by private investment fund, Western Gate, shareholders have formally expressed concerns to the board regarding governance, transparency and advocating for the protection of all shareholders.
The coalition has called for the appointment of a board member with relevant, recent sector experience to represent the interests of minority shareholders.
Currently, the board has only two members with experience in retail, and no member has worked in the food retail sector for more than ten years, according to the coalition.
Moreover, none of the board members have any experience in proximity food retail in Europe – DIA’s principal business model.
The coalition also highlighted that the interests of board members are not in sync with those of shareholders, and urged DIA to properly incentivise its board by aligning board and executive total compensation with share price performance.
The shareholder group also supported the idea of LetterOne considering the sale of part of its stake in DIA to boost market liquidity, as its substantial holding in the company contributes to DIA's low market valuation.
'Minority Shareholder Interests'
Luís Amaral of Western Gate stated, “We are frustrated that DIA’s board of directors has repeatedly rejected offers from Western Gate to work together to better promote the company’s successful turnaround. As a coalition, we call for DIA’s board to act in the interests of all stakeholders and not just the majority shareholder.
“The board requires more experienced and relevant sector expertise, and closer alignment with minority shareholder interests. The board’s unwillingness to address its shortcomings has had a detrimental effect on the company’s perception in the market and it is time for the company to change.”
