NEW YORK, Dec 10 (Reuters) - Matthews International ( MATW )

said on Tuesday that its business outlook is strong

after hedge fund Barington Capital Management earlier on Tuesday

signaled it wants three seats on the casket maker's board and

plans to oust its long-serving chief executive.

The Pittsburgh-based company, which makes products for

cemeteries, funeral homes and crematories, said on its last

earnings call that JPMorgan Chase ( JPM ) is exploring strategic

alternatives. The news pushed the stock price up more than 20%.

Chief executive Joseph Bartolacci, who has been running

Pittsburgh-based Matthews for nearly two decades, has grown

revenues to $1.8 billion today from $700 million in 2006 and

diversified its holdings through acquisitions, the company said.

Barington's founder, James Mitarotonda, said Bartolacci

lacks credibility and experience to run the conglomerate with

its technology focused businesses.

The New York-based hedge fund wants Matthews to consider

divesting its SGK Brand Solutions segment, follow through with

its review for its Warehouse Automation and Product

Identification businesses and find a partner for its Energy

Storage (dry cell lithium-ion battery) manufacturing business.

Barington nominated three director candidates, arguing the

board and management needs better oversight to help push up the

share price. Since January, the share price has dropped 16% and

it is down 17% over the last five years.

The company said it has added two new independent directors

over the past two years and three independent directors over the

past five years and will continue to regularly refresh the

board.

It also said it remains open to constructive engagement with

Barington. The two sides reached an agreement two years ago that

allowed Mitarotonda to meet regularly with company leaders.

Barington said working with the company was "not productive" and

that it "can no longer accept the status quo."