Alta Fox files suit against Daktronics

Alta Fox Capital Management, the largest shareholder of Daktronics (DAKT), based on its beneficial ownership interest on a fully converted basis of 11.7% of the company’s outstanding shares, announced that it has filed a lawsuit against the company and Chairman, President and CEO Reece Kurtenbach in the United States District Court for the District of South Dakota. The suit is in response to Daktronics’ recently called Special Meeting of Shareholders to reincorporate from South Dakota to Delaware. Alta Fox has also filed a preliminary proxy statement to solicit shareholder votes AGAINST the Reincorporation Proposal. Tellingly, the company’s preliminary proxy statement reveals that the principal reason for reincorporation is to eliminate cumulative voting, a statutory right for all shareholders of companies incorporated in South Dakota. The Reincorporation Proposal appears to be in response to Alta Fox’s publicly disclosed plan to nominate highly qualified candidates for election to the Board of Directors. “In our view, the Board’s objective is to use a change in the company’s jurisdiction to eliminate shareholders’ long-standing rights under South Dakota law and prevent the Board from being held to account. Alta Fox believes the timing of the Reincorporation Proposal reveals that the Board’s intent is to weaken shareholder rights.”