13D Filing: Starboard Value LP and Forest City Realty Trust Inc (FCE.A)

Item 4.

Purpose of Transaction.

The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity.  Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On March 22, 2018, the Issuer entered into an agreement (the “Agreement”) with certain of the Reporting Persons (collectively, “Starboard”). The following description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the entire Agreement, which is incorporated herein by reference and filed herewith as Exhibit 99.1.

Pursuant to the Agreement, among other things: (i) the Issuer has agreed to accept the resignations of certain members of the Issuer’s board of directors (the “Board”), and to nominate and appoint specified new Board members; (ii) the Issuer has agreed to identify and recommend an additional new independent director and a new Chairman or Executive Chairman of the Board; (iii) the Issuer has agreed that Starboard will have the right to recommend one additional director for appointment to the Board (the “Starboard Appointee”); (iv) until the expiration of a specified standstill period and subject to Starboard’s ownership of a minimum number of Shares and to certain other criteria, Starboard will be entitled to designate replacements for the Starboard Appointee; (v) the Board will nominate, recommend, support and solicit proxies for the agreed directors for election to the Board at the Issuer’s 2018 annual meeting of stockholders (the “2018 Annual Meeting”); (vi) Starboard has agreed to vote all of its Shares in favor of each of those nominees and of certain other matters at the 2018 Annual Meeting, subject to certain conditions; (vii) the Issuer has agreed to appoint the Starboard Appointee as Chairman of the Nominating Committee and certain other directors to certain committees of the Board; and (viii) for the specified standstill period, Starboard will refrain from certain conduct and the Issuer will not take action to increase the size of the Board to more than 13 directors. On April 2, 2018 Starboard recommended Gavin T. Molinelli as the Starboard Appointee.

Except as set forth above or as would occur upon or in connection with completion of, or following, any of the actions set forth below, no Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D.  The Reporting Persons intend to review their investment in the Issuer on a continuing basis.  Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board, engaging in discussions with stockholders of the Issuer or other third parties about the Issuer and the Reporting Persons’ investment, including potential business combinations or dispositions involving the Issuer or certain of its businesses, making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including board composition), potential business combinations or dispositions involving the Issuer or certain of its businesses, or suggestions for improving the Issuer’s financial and/or operational performance, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, including swaps and other derivative instruments, or changing their intention with respect to any and all matters referred to in Item 4.