Crown Castle co-founder launches proxy fight, challenges Elliott agreement

A co-founder of telecommunications company Crown Castle has nominated a rival slate of directors to the firm’s board, muddying 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 release Tuesday, urging the company to sell its fiber business and improve operational efficiency.

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

The former Crown Castle CEO, who last worked at the company two decades ago, also called the cooperation 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 effort to join forces with the activist around the same time that 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 advisor, and no formal proposal or offer to form a group was ever made, another person familiar with the matter said. The conversations focused on identifying potential investors who were interested in Boots Capital’s plan for Crown Castle, that person said.

Elliott rejected Boots Capital’s entreaties, the people said, which they described as seeking investment or access to investors.

Now, Miller is publicly excoriating 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 fight at Crown Castle prior to Elliott’s November launch and had been in conversation with Crown Castle since at least August, the people said. One of the people said the special-purpose vehicle was attempting to raise hundreds of millions of dollars but that it was unable to meet that goal.

Much of Miller’s plan mirrors Elliott’s latest campaign and an earlier effort from the activist in 2020. In both instances, Elliott said governance changes and operational improvements were needed.

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

In a letter to Crown Castle dated Feb. 14, Boots Capital’s counsel urged the company to put the cooperation agreement to a shareholder vote. The letter said that Crown Castle’s board had “appeased” Elliott and allowed it to influence board nominations before the cooperation agreement had been signed.

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

“Your letter is replete with factual inaccuracies and completely distorts the nature of the relationship between CCI and Elliott,” said Scott Barshay, partner and corporate department chair at Paul, Weiss. Barshay is advising Crown Castle.

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

“Remarkably, the Crown Castle Board did not specifically require Elliott maintain ownership thresholds to keep these privileges,” Miller said in his letter to Crown Castle chair Rob Bartolo. 

Elliott said when it launched its campaign that its economic interest in Crown Castle was around $2 billion.

An Elliott spokesperson said that claim was “categorically false.”

“Elliott remains one of the largest investors in the Company and is the largest investor after the three index fund shareholders,” the firm’s spokesperson 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 mix of stock and derivatives, which are not fully reported out on regulatory filings.

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

One month later, on Jan. 30, Boots presented its proposal to Crown Castle’s expanded board. A redacted version of that presentation was attached to Miller’s release. Boots said that Crown Castle could fetch up to $15 billion for its fiber business and that by working with Boots and Miller, Crown Castle could provide a list of more than two dozen potential buyers or financing sources for a sale of the fiber business.

Also included in that presentation was a request that Crown Castle cover the costs of Boots’ analysis and pre-proposal outreach, which Miller said in his release were around $5 million.

Crown Castle’s board dismissed the proposal following the call and their review, according to the people familiar, who noted that the company had already hired advisors from Bank of America and Morgan Stanley weeks earlier to conduct the same work.