Exclusive: Gaming Gear Supplier Turtle Beach Nears Board Deal With Donerail

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Visitors play video games with Turtle Beach headphones at Paris Games Week, a video game trade show in Paris, France, October 26, 2016. REUTERS/Benoit Tessier

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May 15 (Reuters) – Donerail Group is close to reaching an agreement with Turtle Beach Corp (HEAR.O) that will give the activist investment firm representation on the U.S. equipment company’s board of directors. game, people familiar with the matter said on Sunday.

Donerail, which owns 7.4% of Turtle Beach’s outstanding shares, criticized the headset and gaming controller maker for operational missteps and pushed the company to sell itself. Turtle Beach claims to have done its best to find a buyer at an attractive price.

Turtle Beach has agreed to add three candidates from Donerail to its board of directors, increasing it from six to nine directors, the sources said. One director is expected to retire at next month’s annual meeting.

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It comes after Turtle Beach’s top shareholders informed the company that they plan to back Donerail’s board nominees at the June meeting, the sources added. Donerail announced in March its intention to replace the entire board, including chief executive Juergen Stark, with its own candidates. The settlement will spare Turtle Beach this advice challenge. Read more

Turtle Beach’s board of directors has formed a strategic review committee to oversee the company’s sale process and it will be made up of four members, including two directors from Donerail, the sources said. Donerail’s managing partner, Will Wyatt, will advise that committee, the sources said. Read more

If Turtle Beach is not sold within 120 days, a director from Donerail and another director that Donerail would be allowed to help select would join the board.

The sources said the settlement between the two parties could be announced as early as Monday and asked not to be identified as the matter is confidential.

Turtle Beach, which has a market value of $275 million, declined to comment.

Its stock price has fallen 42% in the past 52 weeks, compared to a 3.4% drop in the S&P 500 index.

Turtle Beach said earlier this month that it has engaged with potential buyers three times over the past five years.

Last year, Donerail offered to buy Turtle Beach for $36.50 per share. In March, Donerail said it had withdrawn the offer.

Turtle Beach recently received new acquisition interest, the sources say, and has been in talks with at least two strategic buyers. The company expects to have contacted more than 50 parties as part of the sale process, one of the sources said.

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Reporting by Svea Herbst-Bayliss in Boston; Editing by Lisa Shumaker and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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