Benzinga | Aug 31, 2020 08:35AM EDT

Leaf Group Shareholders Comment on the Company's Strategic Review Process, Urges Company to Redo Process with Shareholder Oversight

Investors owning more than 40% of Leaf Group Ltd. ("Leaf Group" or the "Company") (NYSE:LEAF), which includes Osmium Partners LLC, PEAK6 Investments LLC, Boyle Capital Opportunity Fund, LP, Oak Management Corp., Generation Capital Partners II LP, Generation Partners II LLC, Spectrum Equity Investors V, L.P. and Spectrum V Investment Managers' Fund, L.P. (together, the "Investor Group"), today issued the following statement commenting on an August 28th article published on www.CorpGov.com ("Leaf Group's Stubborn Desire to Go it Alone")1.

"This recent media report cites several sources who provide further damning evidence supporting our belief that Leaf Group's 'strategic review' was a sham process. We urge all shareholders to read the full article, but several elements are worth noting here:

* The report cites one potential strategic buyer as indicating that 'the company broke many normal rules of conduct in a sale process, effectively ruling out the possibility of doing a deal of any kind.'

* According to that individual, 'There weren't any chances to meet senior management to discuss details or access to a so-called data room, which normally serves to provide potential buyers with critical information that isn't given to the public.'

* Further, the article cites another person close to the Company as noting that 'Mr. Moriarty has shown a lack of interest in selling parts of the business in the past.'

* According to the article, that person also noted that Mr. Moriarty seemed to conduct himself like a controlling shareholder or imperial CEO despite the fact that Mr. Moriarty owns very little of Leaf Group's outstanding stock.

* The report also reiterates, the so-called 'independent' review of strategic alternatives was led by a director with ties to Mr. Moriarty and who, the Board has now admitted, was not independent.

It is increasingly clear why the 'process did not yield a single offer for the whole company' over 13 months -- an inconceivable outcome. Because buyers weren't provided the opportunity to make an informed bid.

In light of these new revelations, we once again call on the Board to allow former directors -- two of whom are principals at investment firms that are participants in the Investor Group -- to disclose their first-hand observations regarding the strategic alternatives process.

Further, we again urge the Board to immediately terminate Sean Moriarty and refresh the Board with individuals chosen by Leaf Group's shareholders. Given the significant failings and apparent management interference with the strategic alternatives process, we also call upon Leaf's directors to start a new process that will be overseen by an active, refreshed and objective Board.

We also note that any other party that had or has interest in acquiring all or parts of Leaf Group may contact the Investor Group at www.LiberateLeaf.Group."