Lendlease shares up despite blast from shareholder Tanarra
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The news: Shares in Lendlease were higher in afternoon trading, despite the company receiving a letter from shareholder Tanarra Capital that pointed to the need for fundamental change and accused the company of having an “arrogant” culture.
The numbers: Lendlease shares were up 1.12% to $6.32 by 1:19pm AEDT.
Over the last five years, the company’s share price has fallen 47% and is currently lower than it was 30 years ago.
The context: On Wednesday, the Australian Financial Review first reported that Tanarra Capital founder and CEO John Wylie, along with portfolio manager Vidhur Rangaswamy and investment manager Lee Mickelburough, sent Lendlease a letter detailing the need for a fundamental strategy change for the company to survive.
They said Lendlease’s main challenges were that its “flywheel” business model was fundamentally broken, its culture did not enable success and that capital allocation was skewed by misplaced targets and a lack of appropriate discipline.
The letter also detailed eight recommendations including abandoning its current reset, create and thrive strategy, exiting all international construction, cutting costs, setting more ambitious return on equity targets and improving transparency.
What they said: “... a radical overhaul of the company and its strategy is imperative – not just for future success, but for its survival,” the letter said.
“... People dealing with the company and former company insiders routinely describe the culture as bureaucratic, arrogant, top heavy, risk-averse and siloed, with far too many management layers, international committee meetings and even cases of public in-fighting between divisions.”
The source: Tanarra Capital
