GEO Investing

A 13D/A filed today shows Castle Union has decreased its stake in Meru Networks (MERU).

With no purpose of transaction it is unclear if Castle Union will look to liquidate the remaining position (1.4 million shares, 5.8%) or if they are still committed to forcing management to sell the company as previously stated in prior 13D filings.

Castle Union Letter to Shareholders

A Castle Union letter to shareholders states:

“…

  • Time is of the essence and the time has long since passed for the Board to take proactive steps to maximize shareholder value. We do not believe MERU should remain an independent company and the Board must immediately commence a sale process.
  • The chasm to significant profitability is too wide to cross and this leaves the Company with no viable path out of its unprofitable sub-scale purgatory other than a sale to a strategic acquirer.

…”

In GeoInvesting’s March 10, 2015 premium email, it was stated that:

“MERU shares have been falling on rumors of a key activist, Castle Union possibly selling some of its stock.  We have not been able to confirm or deny these rumors and representatives of Castle Union have not returned our calls or e-mails. Regardless, we will have to wait to see if Castle Union files a 13D/A to determine if they have sold any of their shares.  Regardless of Castle Union’s action, we still feel MERU shares are in play as an acquisition target. Yesterday after the close, MERU filed an 8-K describing the resignation of one of its board of directors.  This position is expected to be filled by John Kurtzweil, an individual nominated by one of the activist funds involved in the MERU story (Vertex Special Opportunities Fund). Thus, it appears the bullish activist theme is still in tact. However, recent price action in shares of MERU could negatively impact the price it would get acquired for, if such an event were to occur. Overall, it appears the sell off in MERU shares has been overdone; we plan to contact management to obtain an understanding of the recent developments and health of the business.”

To see full coverage on MERU please go here.

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