Crown Castle’s co-founder launched a proxy fight challenging the settlement with Elliott

Co-founder of a telecommunications company Crown Castle nominated a competing list of directors on the company’s boardmuddying the waters months after activist investor Elliott Management and Crown Castle signed a cooperation agreement.

Ted Miller, who helped launch the company in 1994, along with his investment vehicle Boots Capital, presented his thesis to investors in a note on Tuesday, urging the company to sell its fiber optic business and improve operational efficiency.

The list of four directors he nominated includes himself and his brother-in-law. Crown Castle said in a statement rejecting the shortlist that Boots Capital’s nominees “do not possess the relevant expertise and experience”.

The former Crown Castle chief executive, who last worked at the company two decades ago, also called the partnership agreement with Elliott “coercive and disenfranchising” and said it should be put to a shareholder vote.

But Miller and his partners reached out to Elliott Management in an attempt to join forces with the activist around the same time Elliott launched its second campaign in November, people familiar with the matter told CNBC.

That preliminary contact between Elliott and Boots Capital was through an adviser and no formal proposal or offer to form a group was ever made, another person familiar with the matter said. The talks focused on identifying potential investors interested in Boots Capital’s plan for Crown Castle, this person said.

Elliot declined Boots Capital applications, the said the people, which they described as seeking investment or accessing investors.

Miller has now publicly criticized Elliott’s approach as lacking “expertise, vision and urgency”.

Miller had been trying to raise money for a special-purpose vehicle to launch an activist battle in Crown Castle ahead of Elliott’s launch in November and had been in talks with Crown Castle since at least August, the people said. One of the people said the special-purpose vehicle was trying to raise hundreds of millions of dollars but fell short of that goal.

Much of Miller’s plan echoes Elliott’s last campaign and the activist’s earlier efforts in 2020. In both cases, Elliott said management changes and operational improvements are needed.

Shortly after Elliott launched his second campaign in 2023, Crown Castle’s then-CEO said he would retire, and a few weeks later the company said it would launch a strategic review of its fiber business, as Elliott had requested .

In a letter to Crown Castle dated February 14, counsel for Boots Capital urged the company to put the collaboration agreement to a shareholder vote. The letter said Crown Castle’s board had “appeased” Elliott and allowed him to influence board nominations before the collaboration agreement was signed.

Crown Castle’s attorney disputed those claims in a letter sent Tuesday.

“Your letter is full of factual inaccuracies and completely misrepresents the nature of the relationship between CCI and Elliott,” said Scott Barshay, partner and chairman of the corporate department at Paul, Weiss. Barshay advises Crown Castle.

Miller said Tuesday that Elliott had shed “93% of its stated investment exposure,” citing the firm’s latest regulatory filing.

“Notably, the Crown Castle board did not specifically require Elliott to maintain ownership thresholds to retain these privileges,” Miller said in his letter to Crown Castle Chairman Rob Bartolo.

Elliott said when he launched his campaign that his economic interest in Crown Castle was about $2 billion.

A spokesman for Elliott said the claim was “categorically false”.

“Elliott remains one of the largest investors in the company and is the largest investor after the shareholders of the three index funds,” the firm’s spokesman said.

Elliott’s economic exposure to Crown Castle remains largely unchanged, one of the people said. It is not uncommon for activists to structure their positions using a combination of stocks and derivatives that are not fully reported in regulatory filings.

Crown Castle announced its partnership agreement with Elliott in December and added two directors, including Elliott portfolio manager Jason Heinrich.

A month later, on January 30, Boots presented its proposal to Crown Castle’s enlarged board. Edited version of this presentation was attached to Miller’s message. Boots said Crown Castle could fetch up to $15 billion for its fiber optic business and that by working with Boots and Miller, Crown Castle could provide a list of more than two dozen potential buyers or sources of financing to sell the business to fibers.

Also included in that presentation was a request that Crown Castle cover the cost of Boots’ analysis and preliminary scoping of the proposal, which Miller said in his release was about $5 million.

Crown Castle’s board rejected the proposal after the invitation and their review, according to people familiar with the matter, who noted that the company had already hired advisers from Bank of America and Morgan Stanley weeks earlier to do the same work.