Bowing to Pressure, St. Joe to Explore Strategic Alternatives

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Days after its biggest shareholder threatened a proxy fight, St. Joe Company's board announced its hired a financial advisor to seek strategic alternatives.

In a statement, the company's president and CEO Britt Greene, said, "We have engaged Morgan Stanley to undertake a comprehensive and thorough review of all available alternatives, and our Board and management are committed to taking the appropriate and necessary actions to enhance value for St. Joe shareholders."

On Sunday, CNBC reported mutual fund manager Bruce Berkowitz would seek to restructure St. Joe'sboard, hire a financial advisor and end the company's losses in six months.

A person close to Fairholme told CNBC that Berkowitz, whose Fairholme Capital owns 29.7 percent of St. Joe , would call a special shareholder meeting if the board did not agree to his proposals.

No word yet as to whether the board agreed to, or rejected Berkowitz's proposal that he be appointed Chairman and that current Chairman Hugh Durden and three other directors step down.

Fairholme declined comment and calls and emails to St. Joe were not returned.

The largest single landowner in northwest Florida, St. Joe lost money in 2008 and 2009, as well as in the first three quarters of 2010. The firm which has residential and commercial real estate holdings and timberland, has been hard hit by the downturn in the real estate market.

Its also been the focus of a tug of war between two respected investors, Berkowitz who maintains the company has solid potential, and short seller David Einhorn of Greenlight Capital who claims the company's assets and stock are overvalued.