Hudbay Minerals settles board battle with shareholder Waterton

(Reuters) - Hudbay Minerals Inc said on Friday it had agreed with Waterton Global Resource Management Inc, its second largest shareholder, to seek election of a slate of 11 board members that includes nominees proposed by both parties.

The agreement settles a proxy contest with the private equity firm, which nominated five directors to the Canadian miner’s board, two of whom the company accepted before one dropped out.

Hudbay shares rose 2.1 percent to C$8.78 in early trading in Toronto, compared with the Toronto stock benchmark’s 0.25 percent gain.

“We are not overly surprised as we had assumed that the Board would see only a minor change as a result of Waterton’s efforts,” Mark Llanes, an analyst at Credit Suisse, wrote in a note. “Overall, we view this settlement positively.”

The 11 directors include Chair Alan Hibben and current director Igor Gonzales, whom Waterton had sought to replace, and Waterton nominees Peter Kukielski and Daniel Muniz Quintanilla. The rest, including Chief Executive Alan Hair and David Smith, a Waterton nominee whom Hudbay had already accepted, had not been in dispute.

Only votes on the agreed-upon nominees will be considered at Hudbay’s annual shareholder meeting on May 7, the company said.

Both companies have also agreed to look for a successor as chair to Hibben following the meeting. After Hibben steps down as chair, he will remain on the board until the 2020 annual meeting of shareholders.

Waterton, which owns a 12.1 percent stake in Hudbay Minerals, last month sued Hudbay to stop it from soliciting proxies for its annual shareholder meeting, alleging material omissions related to an earlier acquisition attempt.

Much of Waterton’s ire against Hudbay surrounded alleged talks the company had to acquire Chile’s Mantos Copper for about $780 million last year, which Bloomberg reported in October.

Reporting by Shradha Singh in Bengaluru; Editing by Shailesh Kuber and Jonathan Oatis