(Bloomberg) -- Citigroup Inc. signed an agreement with ValueAct Capital Management that allows the bank to share confidential information with the activist hedge fund about strategy, governance and planning.

  • “This agreement will enable Citi to work closely with one of its largest shareholders and one with unique insights and a strong track record of adding value to global organizations,” Citigroup Chief Executive Officer Michael Corbat said in a statement Friday.

Key Insights

  • ValueAct currently holds a board seat at Alliance Data Systems, a private-label credit-card issuer and a competitor to Citigroup, creating a conflict that prevents ValueAct from seeking a Citigroup board seat. When that situation changes, ValueAct will probably propose a candidate for the bank’s board, the two companies said in the statement.
  • Analysts have wondered how involved the activist investor would be at Citigroup after ValueAct said in May it had built a stake in the lender. It said at the time the bank was positioned for success because it provides the financial “plumbing” that multinational corporations need to operate.
  • ValueAct isn’t among the bank’s top five shareholders, raising the question of whether other investors will balk at the firm getting information others don’t have. ValueAct owns about 32 million Citigroup shares, or 1 percent of shares outstanding, according to the statement.

Market Reaction

  • Citigroup’s shares rose 1.1 percent to $57.05 at 8:49 a.m. in New York.

To contact the reporter on this story: Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steve Dickson

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