Hedge fund pushes for sale of Zagg, seller of screen protectors
By Josh Kosman
October 23, 2019
The nation’s dominant maker of smartphone screen protectors may soon need to shield itself against a hedge fund demanding a sale.
Zagg, which makes protective covers for iPhones, Android phones and other devices, has been put on notice by a hedge fund formed in 2017 by former Greenlight Capital and Jana Partners executives. Arex Capital Management has taken a 7.5 percent stake in Zagg and plans to push for a sale, it said in a Securities and Exchange Commission filing Tuesday.
Zagg “should maximize shareholder value by selling the company as a whole, or by selling its brands,” Arex wrote in announcing the stake.
If Zagg fails to sell itself “by the end of the year, perhaps sooner,” Arex will step up the volume, Arex founder Andrew Rechtschaffen, a former partner at David Einhorn’s Greenlight Capital, told The Post.
“At this time, all options, including calling a special meeting and running a slate of directors, are on the table,” Rechtschaffen said of Arex’s first public activist play.
Zagg, based in Midvale, Utah, declined to comment. The stock rose 2.7 percent to $7.31 Wednesday, giving it a $213 million market cap.
As The Post exclusively reported on Aug. 21, Zagg is not without suitors. The company, which makes up an estimated 90 percent of US screen-protection sales, secured confidentiality agreements over the summer from two potential buyers in exchange for a look at its financials. One of the potential bidders was Acco Brands, owner of Swingline staplers and Artline pens. The other bidder was an undisclosed private equity firm that offered as much as $9 a share, according to the The Post’s report.
Zagg has since announced a sales process — but no winner.
Sources have told The Post that the company may be holding out for a bigger price tag than the $9 a share offered by the private equity firm.
The summer sales process kicked off after Zagg cut its 2019 earnings forecast amid weakening smartphone sales and concerns about the impact US tariffs could have on its supply chain.
Screen protectors for the iPhone, which has seen sagging sales, make up the bulk of Zagg’s revenue.
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