Crown Castle rises 5% on Elliott's $2B stake, push for changes

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Crown Castle rises 5% on Elliott's $2B stake, push for changes
Credit: © Reuters.
(Updated - November 27, 2023 8:08 AM EST)

Crown Castle (NYSE: CCI ) shares rose more than 4.5% in U.S. premarket trading after activist investor Elliott Investment Management confirmed a stake in the company and plans to advocate for changes at the wireless tower owner.

With a stake exceeding $2 billion, Elliott plans to engage in discussions with the company to implement changes that will enhance its stock performance.

In a letter to the Board, Elliott said the management overlooked its data-driven analysis and failed to implement the recommended changes. Consequently, Crown Castle's performance has consistently lagged behind its peers over the past 15 years, underperforming the S&P 500 index across one-, three-, and five-year periods.

Moreover, the company's stock price recently reached a six-year low.

"Crown Castle suffers from a profound lack of oversight by the Board, which has contributed to its irresponsible stewardship and flawed financial policy. The Company's strategy, led by CEO Jay Brown since 2016, has been a failure, as demonstrated by the breathtaking magnitude of its underperformance."

Elliott added that "during the tenure of the current executive team, Crown Castle has underperformed its direct peers by an average of 85% in total return, which translates into nearly $26 billion of unfulfilled shareholder value."

As a result, the activist investor has called for the addition of a new executive and board leadership, an overview of the fiber business, an optimized inventive plan, and improved corporate governance.

This marks Elliott's latest effort to instigate changes at Crown Castle. In 2020, the activist investor urged a strategic review of the company's fiber business.

The CCI stock has depreciated by approximately 50% since reaching its record high, with a 24% decline this year as of the latest close.

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