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Another Activist Investor Fights Proxy Fight Against BlueCora

Last year, active investor and advisory firm Anchora began a public proxy battle with executives of Bluecora, the parent company of tax-focused broker/dealer Avantax Wealth Management. Now BlueCora is facing another shareholder intent on changing the firm’s direction, as active investor Engine Capital issued an open letter to shareholders on Monday, seeking three seats on the public company’s board of directors.

“We have spent considerable time analyzing BlueCora’s assets, business plans, capital allocation decisions, corporate governance and historical performance,” Engine wrote in the open letter. “We’ve also worked with BlueCora’s leadership to better understand why the company has failed and failed to deliver meaningful value to shareholders over the years. Unfortunately, our analysis and engagement with the leadership helped us It concludes that there is an urgent need for a shareholder-driven change in the board of directors after another year of poor performance in 2021.”

BlueCora’s share price is up about 4.5% over the past 12 months and about 3% year-over-year through February. 14, 2022. Its shares were down 0.05% on Monday.

Engine Capital, which owns about 3.7% of BlueCora, has acquired J. Andrew Kalbaugh, former Managing Director and Board President of National Sales and Consulting at LPL Financial; Elizabeth DeMars, Director of Trajectory Alpha Acquisition Corp., Cleaver Leaves Holdings, and former CEO and President of Kubiant and The Street; and Chris X Moloney, CMO, chief digital officer and senior executive leader of Chameleon Collective, a management consulting firm.

The firm has also launched a website to share its views on the company and communicate with the stakeholders.

In a statement in response to the open letter, BlueCora said Engines recently worked with company executives and first bought shares in December 2021.

“We would have welcomed, and will continue to welcome, any input the engine has for us,” the statement said. “Indeed, five days ago, our Chairman of the Board contacted Engines Principal Arnaud Ajdler to offer talks and a meeting with board members; Mr. Only after doing

Engine originally nominated four people to the board, including Ajdler. BlueCora claims that Azdler’s director candidate questionnaire indicated that he had knowledge of “various material matters” that he would only gain from discussions with former BlueCora directors and executives. BlueCora said Ajdler denied those discussions.

“It was Mr. Azdler’s gross misrepresentation that led to our board rejecting Mr. Azdler’s nomination and questioning his integrity and suitability to serve as a director on our board,” BlueCora’s statement said. raised.” “Engine, for its part, has now withdrawn Mr.Ajdler’s nomination and continues to make misogynistic statements about the extent to which Mr.Azdler had important conversations with our former directors and executives before starting a proxy fight. of it.”

Engine principals say the rejection was “a hopeless attempt to intimidate a major shareholder and undermine corporate democracy,” according to the letter. “BlueCora accused us of incorrectly answering a question on the 66-page Director Candidate Questionnaire and consequently moved our appointment of Engine Principal to unilaterally invalidate,” Engines said in the letter. Rather than allow the board to create another self-serving distraction, we’ve revised our slate to include only three completely unaffiliated nominees. We will continue to do everything in our power to ensure that a competition is focused solely on the merit and poor performance of the Company. We won’t be dragged into the sort of gutter-level competition that happened last year, when BlueCora spent millions of dollars on an extremely aggressive campaign to prevent another meaningful shareholder from gaining board representation. ,

Engine argues that BlueCora has underperformed its peers over the past one, three, five and 10-year periods, including the tenure of CEO Chris Walters. The shareholder also complains of the company’s bloated overhead and that its TaxAct and Avantax businesses are not achieving their potential. And BlueCora’s forward earnings multiple is close to its lowest level ever, the engine argued.

Last March, Anchora, an RIA recently acquired by Focus Financial Partners, waged a proxy battle against BlueCora, arguing that the management team could be involved in a strategic roll-up of tax-focused broker/dealers including Avantax, BlueCora’s HD failed to achieve the promised synergy between West and First Global, and BluCora’s older professional tax software businesses, which drive the stock price. But shareholders ultimately voted to retain the existing board members.

In August, Ancora sent a letter to the board of directors, putting more pressure on BlueCora to sell its online tax preparation unit, TaxAct.

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