Greenlight Capital Sends Letter to Board of Brighthouse Financial Encouraging Engagement with Reported Suitor
Outlines Belief that Going Private, and the Rumored Transaction, are in the Best Interests of All Shareholders
The full text of Greenlight's letter is below.
Board of Directors
Brighthouse
Ladies and Gentlemen:
Just say "Yes".
As you know,
Based on media reports, we understand that for the past several months, the Company has explored strategic alternatives, including a sale of the Company, and that one credible buyer, Aquarian, has emerged with a final bid of around
We agree wholeheartedly that the time has come to sell the Company.
We believe selling the Company at this price is in the best interests of all shareholders. Throughout its tenure as an independent entity, Brighthouse has been a perennial disappointment for investors. At the time of the spin-out, the Company traded at 56% of book value and 6.4x consensus 2018 EPS. Eight years later, despite repurchasing 52% of its shares, Brighthouse trades at just 32% of book value and 2.1x 2026 consensus EPS. As of
It is clear that Brighthouse has not earned the confidence of public market investors. The accounting is notably opaque and the Company has failed to articulate an investment rationale to attract investors. For nearly all of the Company's history, its stock has been rated neutral or negative by most analysts. There is no reason to believe these things will change. In our view, the Company would be better off selling at a significant control premium to private investors, who we believe would be best positioned to drive operating efficiencies and optimize the portfolio.
We therefore urge the Board to follow through on the process it began, engage constructively with the bidder, and move forward expeditiously to close this transaction.
We consider the reported offer highly credible and one that can be consummated with little risk. In fact, if a compelling case were presented to me, I would be willing to participate in a Brighthouse financing, as I firmly believe that Brighthouse can succeed as a private company. I am also impressed with the reported bidder's success in previous insurance company acquisitions.
Importantly, there is no reason to believe that other alternatives, like asset sales, reinsurance transactions or a refreshed business plan as a public company will deliver value to shareholders that is greater than the reported deal price, and certainly not on a risk-adjusted basis.
Brighthouse has now had eight years to succeed in the public markets and it has failed to do so. A sale of the Company would allow shareholders to realize immediate and certain value at a substantial premium, and eliminate the risks inherent in persisting with the status quo or gambling on an unproven new strategy or capital structure. We believe most shareholders would welcome this outcome.
The Board should respond to the reported bidder in a timely and constructive manner and act decisively. If the Board does not act in the best interests of the shareholders, it should expect
In the interest of transparency, we intend to make this letter public. We encourage the Board to do the right thing for Brighthouse and all of its stakeholders, and we look forward to continuing to engage with you, as necessary, to progress this process forward.
Sincerely,
President
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