Corvex Urges Crown Castle To Improve Capital Allocation Strategy - Update

(RTTNews) - Activist investor Corvex Management LP on Tuesday urged Crown Castle International Corp (CCI) to improve its capital allocation strategy, spur growth and enhance shareholder value.

In a letter to Crown Capital shareholders, Corvex urged the company to increase its dividend payout ratio or boost the leverage ratio and buy back more stock.

Corvex Management LP manages investment funds that own beneficially or economically about 12.6 million shares and share equivalents of Crown Castle, a Houston, Texas-based provider of infrastructure for broadcasting and mobile telephony.

In the communique, Keith Meister, managing partner of Corvex, said, "Given the increased public debate around Crown Castle's capital allocation policy as well as the potential for a Verizon towers transaction in the near future, we feel compelled to share our views publicly."

Crown Castle shares gained about 4 percent in morning trade on the New York Stock Exchange.

Corvex believes that Crown Castle's valuation can be improved dramatically and sustainably through a change in the company's capital allocation plan, reducing Crown Castle's cost of capital and enhancing its ability to continue to grow and compound shareholder value over the long term.

"Based on our analysis, we see a near-term opportunity for Crown Castle to drive a 27% re-rating in its equity, and the potential for over 60% upside in 15 months," Corvex said.

Corvex said that once Crown Castle's equity currency has strengthened, the company can aggressively pursue a Verizon towers transaction, creating even greater long-term value for shareholders. However, if the company does not have the right cost of capital, it should not be pursuing acquisitions or issuing equity, whether for Verizon's towers or any other transaction, Corvex said.

Crown Castle acknowledged the letter from Corvex Management LP.

In a statement, the company's CEO Ben Moreland said, "We receive input from many of our shareholders on a regular basis, and we welcome the dialogue and perspective."

Moreland said the company continually reviews its capital allocation strategy, and reiterated plans to address its capital allocation policy, including dividends, on its third-quarter earnings call scheduled for October 31.

Crown Castle stock is trading at $81.58, up $3.11 or 3.97%, on a volume of 1.98 million.