Forum for Shareholders of Crowley Maritime Corporation

Forum Home Page

Resolution of Shareholder Interests

In March 2007, the controlling shareholder of Crowley Maritime offered $2,990 per share to buy out public investors, a price equal to 258% of the last traded price of shares when the Forum started in April 2004.

Crowley Home Page

Crowley Archive Reference


Forum Report: Letter Objecting to Proposed Settlement

(April 10, 2007)


See also:




Sent: Tuesday, April 10, 2007 5:10 PM
Subject: Letter objecting to proposed settlement

Copied below is the text of a letter from Leonard Rosenthal to the judge who will be considering the proposed settlement involving a $2,990 per share buy-out of Crowley Maritime's minority shareholders.  As indicated, Professor Rosenthal objects to the proposed settlement because it does not resolve the claims of the litigation and would instead force shareholders to sell their investments at a price which does not appear to be fair.
Please let me know if you have any questions or comments.
Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Fax: 212-605-0325


Leonard Rosenthal, Ph.D.

106 Walnut Hill Road

Newton, MA 02461


April 9, 2007


Delaware Court of Chancery

New Castle County Courthouse
500 North King Street
Wilmington, DE 19801


RE: Civil Action No. 888-N


Dear Chancellor:


I am writing to the court both as a small shareholder in Crowley Maritime and as a finance professor to object to the settlement between Franklin et. al and Crowley Maritime.


While I read in the Purchase Offer that someone wishing to present objections should appear in person, I ask the Court to consider my objections without my being there.  I cannot travel to Delaware as I am still recovering from recent shoulder surgery.


I ask you to consider my objection as being from someone representative of individual shareholders as well as from someone with expertise in the valuation of corporate stock.  I have a M.B.A and a Ph.D. in finance, and I am currently Professor of Finance at Bentley College in Waltham, Massachusetts.  I have been teaching graduate and undergraduate courses which involve equity valuation for over thirty years, and have written on relevant subjects.  Based on this experience and the information provided by Crowley and the investment banker hired to provide an opinion about the fairness of the offer, I believe that the proposed settlement is not in the best interest of the class of shareholders represented by the plaintiffs for the following reasons:


1.      The lawsuit brought by plaintiffs stated that it was intended to protect the rights of minority shareholders in relation to claims that Thomas Crowley was using company resources to enrich himself at the expense of the other shareholders.  Instead of recovering the funds or otherwise addressing the claims of the lawsuit, the proposed settlement forces the minority shareholders to sell out at a price which significantly undervalues the shares.


2.      The plaintiff’s counsel, according to his own statement, did nothing to investigate the fairness of the buyout offer, relying instead on the fairness opinion of an investment bank hired by the people he was suing.  There is clearly no basis for assuming that the “special committee” of the board of directors can be considered truly independent, since its members appear to be associated with the controlling shareholder who selected and elected them.  The opining bank was also selected in a process that, based on Crowley’s own report, raises even more questions about dutiful process and their obvious incentives, including a relatively high $500,000 fee, to accommodate the bidder’s interest in supporting as low a possible price to buy out the minority holders.


3.      The bank’s opinion does not satisfy professional standards.  The four widely used methodologies they selected to support the price were either incorrectly or inappropriately applied, and they completely ignored what most experts would consider to be the most reliable methodology for a thinly traded stock in a cyclical industry.


These are some of the reasons why the opinion cannot be relied upon:


A.     Two of methodologies on which the opinion is based, comparable companies and comparable transactions, actually show that the purchaser is paying too low a price


    Based on a comparable group of companies, and using both optimistic and pessimistic financial scenarios provided by Crowley, the bank looked at 4 valuation measures for the most recent fiscal year and 3 for next year.  For the 2006, only 2 were less than the median of the comparable firms.  For 2007, all 3 were less than the median in both the optimistic and pessimistic cases.


    Based on a comparable group of transactions chosen by the bank to involve a similar business as Crowley’s and again using both optimitistic and pessimistic scenarios, the bank did a similar analysis as above. For the latest twelve months, all but one of the measures was less than the median of the other firms.  For next twelve months, all 3 were less than the median in both the optimistic and pessimistic cases.


B.     For another methodology, discounted cash flow, the bank has not provided enough information to verify the results,  and the significant assumptions which have been stated are lacking apparent justification.


C.    The fourth methodology used by the bank, premiums paid relative to previous prices, is irrelevant for a stock that trades as infrequently as Crowley.


D.    The widely used measure ignored by the bank in its analysis is the ratio of current price to book value.  The comparable group of companies – using the same companies selected by the bank – have a mean current price to book ratio of 2.04.  Based on this, Crowley stock is worth between $4,851 ($2,378 X 2) and $5,826 ($2,856 X 2) per share using fully diluted and undiluted book value, respectively.


I am of course sending overnight copies of my objections to both counsels according to the instructions in the court papers.






Leonard Rosenthal



cc. R. Bruce McNew, TAYLOR & McNEW LLP,





The Forum is open to all Crowley shareholders, whether institutional or individual, and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, as described in the Forum Summary.

There is no charge for participation.  As stated in the Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

All material on this web site is published by Gary Lutin, who is responsible for conducting the Forum.