Activist hedge fund ADW Capital urged automotive service provider Driven Brands to explore strategic alternatives, including a sale or company breakup. ADW Capital currently holds a 2.5% stake in the firm.
In a letter to the board, ADW criticized majority owner Roark Capital for mismanaging the business. Roark Capital maintains a 60% stake in Driven Brands.
ADW alleges that Roark Capital has been distracted by its portfolio of food brands. This pressure follows a significant decline in Driven Brands' shares in February.
The stock drop occurred after the company disclosed material errors in its financial statements. Shares of Driven Brands rose following the news of the activist's letter.