Yesterday, “The Wall Street Journal” reported that the fund has acquired a 4.6% stake in Perrigo, shares worth nearly $600 million, and urges the company to focus on its core business.
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Perrigo (PRGO) shares spiked upwards in pre-market trading Monday after activist investor Starboard Value’s Jeff Smith distributed a letter to the drug company’s recently installed CEO, John Hendrickson, urging it to make “material changes”, possibly including divesting a couple non-core assets.
The activist shareholder sent Perrigo a letter Sunday criticizing the company for failing to live up to performance targets it set while successfully fending off a $26 billion takeover offer previous year from Mylan NV. The stock is down 40 percent since Mylan’s offer failed in November. For example, Smith said that Perrigo’s prescription pharmaceuticals business, which develops and manufactures generic and specialty drug products, has few synergies with the company’s core over-the-counter products business. Visit MarketWatch.com for more information on this news.
Hendrickson took over the CEO job earlier this year, when Joe Papa left the top role to go to Valeant Pharmaceutical International Inc.
Yet Perrigo stumbled and shares have lost more than half their value.
Selling the generic drug division that’s expected to generate $1 billion in sales for 2016 would allow Perrigo to better focus on its lead position globally in over-the-counter (OTC) medications produced by the Consumer Healthcare division.
“Perrigo will review the letter carefully and looks forward to a constructive and productive dialogue with Starboard – as we do with all of our shareholders – while we execute on a number of strategic and operational initiatives”, the company said in a statement. In its letter Monday, Starboard sharply criticized that move by Perrigo management. Unfortunately, since that time, results have gone decidedly in the wrong direction, and management’s promises have been woefully unfulfilled…
Starboard has also been fighting for a special shareholder meeting to replace the board of Depomed Inc., a developer of oral drug-delivery technologies.
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Perrigo’s then-Chief Executive Joseph Papa argued the offer substantially undervalued the company and its future prospects, which he described as bright as the company took its over-the-counter medicines overseas.
