(Adds Marcato statement)
By Michael Flaherty
Oct 11 (Reuters) - A battle between Buffalo Wild Wings Inc and an activist hedge fund heated up on Tuesday after the company named three new directors to its board.
The restaurant chain’s board shuffle sparked an angry response from Marcato Capital Management LP, the activist fund that owns 5.2 percent of the stock and is the company’s fourth-largest shareholder.
“After attempting to engage in substantive dialogue with Buffalo Wild Wings for months, we are deeply disappointed by the company’s unilateral decision to reconstitute its board without consulting us or other outside shareholders,” Marcato said in statement.
Buffalo Wild Wings said early on Tuesday that it appointed CBS Radio President Andre Fernandez, eBay Inc executive Hal Lawton and Levi Strauss & Co Chief Financial Officer Harmit Singh as independent directors. The company also said it would expand its board to nine from eight directors.
The new directors “underscore our commitment to proactive board refreshment, strong corporate governance and independence and diversity,” Chief Executive Officer Sally Smith said in a statement.
The move comes after Marcato said in August that it would be "inappropriate" to add new directors without consulting its major shareholders and offered a senior Marcato executive to serve on the company's board. (bit.ly/2bYRMXp)
The San Francisco-based hedge fund disclosed its stake in July and said the company needed to add more directors to its board with restaurant experience.
Marcato, founded by ex-Pershing Square Partner Mick McGuire, also has said the company should franchise out more of its restaurants.
Marcato could launch a proxy fight in early 2017 by nominating its own directors, if friction between the two sides continues. Buffalo Wild Wings’ director nomination window will likely run from early January to early February, based on last year’s proxy. Its annual meeting is usually held in May.
McGuire said in an interview last week that Buffalo Wild Wings’ management had not been as receptive to Marcato’s plans “as we would like” and repeated his view that the company’s shares could triple over a four-year span.
Buffalo Wild Wings said on Tuesday that two existing board members would step down from their positions effective immediately.
Additional reporting by Abhijith Ganapavaram in Bengaluru; Editing by Martina D'Couto and Cynthia Osterman