(Adds statement from 40 North)
By Svea Herbst-Bayliss
BOSTON, May 1 (Reuters) - GCP Applied Technologies said on Friday that its largest investor had wanted to take control of GCP's board itself before backing activist investor Starboard Value, which also wants to replace most GCP directors.
That investor, Standard Industries Inc and its affiliated entity 40 North Management LLC, which together own 24.4% of GCP's stock, asked to appoint six of nine directors at GCP, the company said in a presentation.
A spokesman for 40 North said, "The statement GCP made in their SEC filing that we asked for control of the board is false."
Four directors would have come from the investor group and the other two would have been Starboard nominees, GCP said in the presentation. Starboard, which is pushing ahead with a proxy fight this year, was handed two GCP board seats last year.
The 40 North group also wanted assurances that David Millstone and David Winter, the co-chief executives of Standard Industries, would lead the GCP board, the filing said.
40 North's plans have not been previously reported.
GCP said it tried to engage with 40 North through dozens of meetings and calls. It proposed a settlement that would have handed three board seats to 40 North representatives with an understanding that the two sides then settle on a mutually agreeable fourth independent director.
But 40 North insisted on control of the board, something that GCP was not willing to hand over, the filing said.
"Over the course of four years, we have had many conversations with GCP and most recently they invited us to join the board," a spokesman for 40 North said on Friday. "We had no interest in being members of a board whose judgment we have no confidence in.
"This is Starboard’s proxy contest, not 40 North’s. We are public shareholders simply voting our shares in favor of the slate most capable of driving the change so desperately needed and we have given a clear explanation of that decision,” the spokesman added.
Earlier this week 40 North threw its weight behind Starboard, which owns 9% of GCP and has also been pushing for control via its nomination of eight directors earlier this year.
The 40 North group said it had no choice but to "support Starboard Value's call for an almost complete replacement of GCP's Board." It said it has been patient with the company since its spinoff from W.R. Grace four years ago and said the current board is "incapable of making sound strategic and tactical decisions."
Together Starboard and Standard Industries, a privately held global industrial business, and 40 North, its related investment vehicle, own more than a third of GCP's shares, putting them in a very strong position to push for changes on the board.
40 North has indicated to GCP that it would like to use GCP as a vehicle alongside its portfolio company, which operates in the same sector, a person familiar with the negotiations said.
GCP also said in the filing that it has been trying to settle with Starboard. "Both 40 North and Starboard rejected any settlement that would involve any independent directors identified by an independent search firm," the filing said.
Companies are traditionally unwilling to hand over the majority of board seats to any one entity, and corporate governance experts do not like it either arguing that other shareholders would be disadvantaged.
Unless the two parties reach a settlement, shareholders will have a chance to vote on the Starboard nominees at GCP's annual meeting later this month.
Reporting by Svea Herbst-Bayliss Editing by Leslie Adler