Major DST Systems Investors to Consider Sale Interest

NEW YORK, July 11 (Reuters) – Top shareholders of data processing company DST Systems Inc will meet in New York on Tuesday to discuss management’s recent dismissal of buyout overtures, activist investor Russell Glass said.

Glass told Reuters that at least 20 of the largest institutional investors in the company would attend the meeting, which he is hosting.

In the last month, Glass has requested that the company hire an adviser to explore strategic alternatives after DST rebuffed advances by him and private equity interests for a buyout at a per-share price in the mid-$60.

DST shares were off 1.3 percent to $54.13 in Monday afternoon trading.

Glass said a letter had been sent to DST Chief Executive Thomas McDonnell inviting the DST board to attend the Tuesday meeting. At the session, shareholders will also discuss what measures management needs to take to enhance shareholder value, he said.

Shareholders have complained that DST management has ignored their pleas, including demands for more disclosure on some of DST’s private investments.

“The company thinks they are still private,” said one shareholder.

Previously, DST’s No. 1 shareholder, George Argyros, a DST board member, told Reuters the company was worth more than an offer in the mid-$60s range.

Argyros, who owns 20 percent of the company, said he was anxious for DST shares to return to around $80. The shares last traded at $80 in 2007.

A second shareholder said he would like to see DST management lay out a plan demonstrating how it expects to reach that valuation.

“(Argyros) has some responsibility to demonstrate the path to shareholders why the company is worth the number,” the shareholder said.

Argyros, chairman and chief executive officer of real estate company Arnel & Affiliates, was not available for comment.

DST CFO Kenneth Hager declined to comment on the Tuesday meeting, including whether there would be board representation at the forum.

“It behooves the board to put someone there,” the first shareholder said. “It’s like in grade school; you never want all the people that are disgruntled together in a room without knowing what they are saying.”

The two shareholders requested anonymity on grounds that they are passive investors in DST.

(Reporting by Nadia Damouni, editing by Gerald E. McCormick and John Wallace)