Why investors want to tear down this corporate giant

Boral was a relatively recent example where Wylie alongside Kerry Stokes and others successfully pushed for the building materials giant to sell a raft of underperforming US assets.

When it comes to Lendlease, Wylie has fully subscribed to the mantra “go big or go home” – the change sought is radical enough to render the company almost unrecognisable.

And timing is everything. Wylie’s agenda for change has been pitched ahead of Lendlease’s coming investor strategy day.

The biggest weapon in the armoury of disenchanted shareholders is the fact that the sharemarket has already spoken. The most damning data point is that the company’s share price is lower than it was 30 years ago.

The performance is not remotely acceptable, according to Wylie’s now-widely circulated letter to the Lendlease board.

He characterises Lendlease as a company that is unwieldy, unfocused and overextended “with multiple, often-unrelated activities spread across four continents that arguably draw more disadvantages from common ownership than advantages”.

Lendlease argues that it has already undertaken a structural reset program under the 2021 appointed chief executive Tony Lombardo, and this resulted in a $320 million reduction in its cost base.

Wylie counters that the share price has fallen 47 per cent since Lombardo embarked on this strategy.

And he likens the Lombardo strategy to applying a lick of paint or a hair trim when what Lendlease needs is to go back to “ground zero”.

Wylie said the company’s international businesses needed to be hived off and ultimately placed in run-off and focus should be on the Australian assets that have historically produced better returns.

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“Take a real knife to costs. This is vastly more than a headcount reduction exercise, it’s a complete cultural reset. Blow up the bureaucracy, bloat, excess layers of management, layers of leadership committees, the 700 or so people in finance, 200 in HR and 110 in sustainability. Commit to being a lean and efficient company, with real job accountability. Be transparent about the cost savings, rather than burying them in future development margins in a way that can never be verified,” he said in the letter.

The trouble is Lendlease, under the current board and management, has already begun on its path to financial rehabilitation. To change course would be difficult.

So far, there has been no talk from the disaffected shareholders that Lendlease management should be changed.

You would have to wonder whether this might be the next instalment.

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