D.F. King Bought by American Stock Transfer

This transaction announced in late May is significant in many ways, saying a lot about the state of proxy solicitation and not a little about the stock transfer industry too. It could be the precursor to similar deals, for related reasons. 

For perspective let us note that D.F. King was a major player in the proxy solicitation business – not as big client-wise as Georgeson or Morrow & Co. (we believe) but bigger (again we think) than Innisfree, MacKenzie Partners, AST Phoenix Advisors, Alliance Advisors, Laurel Hill or Eagle Rock. And D.F. King being one of the pioneers in the industry, established in 1942, with an almost stainless reputation in all that time (not easy) makes its acquisition by AST even more special.

Why did D.F. King sell? There could be multiple reasons: 1) the principals were ready to monetize a valuable asset (and retire?); 2) there was a realization the proxy solicitation industry is over-crowded, with insufficient demand for the advice that solicitors are prepared to give corporate issuers year-round, which issuers may not (don’t?) need; and 3) AST made a financial offer that D.F. King simply could not refuse. We do not know the price tag, because both firms are private.

Whatever the reason(s), #2 above is widely acknowledged and could be the driver of additional major players into the arms of transfer agents, other solicitors or private investment firms. Regarding transfer agent interest, the D.F. King transaction was preceded by Computershare’s acquisition of Georgeson, AST’s initial acquisition of the Phoenix Partners assets, and Registrar & Transfer Company’s formation of Eagle Rock. Proxy solicitation and related corporate governance consulting 365 days a year is almost impossible to make profitable; however, coupling it with stock transfer (including proxy distribution and tabulation) can tip the scales in a winning direction. Mark Healy and his executive team at AST saw that, and acted on it. We think it was a smart move.

So D.F. King’s acquisition reflects over-supply in proxy solicitation, and demand within stock transfer agencies for complementary products to enhance service breadth and profitability. We expect one or more additional deals like this within the next 12 months.