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Exclusive-Hestia seeks to take control of Pitney Bowes board, oust CEO

By Svea Herbst-Bayliss

NEW YORK (Reuters) -Hestia Capital Partners LP plans to overhaul the board of shipping and mailing company Pitney Bowes Inc and replace its chief executive and chair, according to a letter to other shareholders reviewed by Reuters.

Hestia, which scored big gains on a bet on GameStop, plans to nominate more than five candidates for election to the nine-person board of Pitney Bowes early next year.

With a 6.9% stake in the company, Hestia said in the letter that shareholders were frustrated with the operational underperformance of Pitney Bowes and its poor capital allocation, destruction of shareholder value and declining creditworthiness.

Marc Lautenbach has been CEO of Pitney Bowes for a decade and Michael Roth, the chair, has served on the board since 1995.

Hestia proposed candidate replacements for Lautenbach including former ShippingEasy.com chief Katie May and former Stamps.com CEO Ken McBride, according to two sources familiar with the matter.

Pitney Bowes said it engages regularly and openly with shareholders. "Although we remain open to engaging with Hestia, we also look forward to having the discussion about the best path forward with all our shareholders during the 2023 proxy season," spokesperson Bill Hughes said.

Pitney Bowes, which leases postal meters and pre-sorts mail for commercial clients, has seen its share price drop 40% over the past 12 months and 65% over the past five years. Headquartered in Stamford, Connecticut, it is valued at $666 million.

Hestia, run by Kurt Wolf, has urged Pitney Bowes to re-evaluate its capital allocation and e-commerce strategy and has held talks with the company for months, Reuters reported in November.

Wolf suggested that the Pitney Bowes board consider selling the company's Global Ecommerce segment if its results did not improve, Reuters reported. He further proposed creating a board committee focused on capital allocation and strategic planning, like the one he served on at GameStop with billionaire Ryan Cohen.

During private talks, Hestia says it conveyed to Pitney Bowes it would not push to remove directors, replace the CEO or push for the immediate sale of underperforming assets, if the firm received board representation and a new committee, the sources said.

"Roth and Lautenbach, who have collectively made tens of millions of dollars while shareholders have endured massive losses, seem intent on maintaining a clubby and insular boardroom," Wolf wrote in the letter.

Hestia believes Pitney Bowes should focus on cash-generating segments such as Presort Services, its mail aggregation business, and SendTech Solutions, its postal-meter business.

Wolf joined GameStop's board and Hestia ultimately delivered returns of 196% in 2021 as he worked alongside Cohen to replace the company's management, pay off its debt and raise $1.7 billion in new capital.

Securities filings show that Permit Capital LLC and Miller Value Partners LP, which were also investors in GameStop alongside Hestia, are also invested in Pitney Bowes.