Activist investor group Starboard Value has spent $600m to buy a 4.6% stake of pharmaceutical company Perrigo, before chastising the Dublin-registered company for its management practices. 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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Starboard Value said that Perrigo should focus on the field of consumer healthcare and over-the-counter drugs.
Perrigo responded by saying that it would take the letter into consideration and that it “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”. Management and the Board went to great lengths to oppose this proposed combination, spending more than $100 million in advisor fees relating to its defense, and promising shareholders that their standalone strategy would produce more value than the transaction given the robustness of Perrigo’s future prospects.
The activist sent Perrigo a letter Sunday criticizing the company for failing to live up to performance targets it set while successfully fending off a $26B takeover offer previous year from Mylan.
Starboard said Perrigo failed to deliver the promised results after the rejection of Mylan offer including the mismanagement of Omega Pharma Invest N.V. integration thus losing share value.
Starboard is among the most aggressive activist hedge funds. In Zoran, which was traded on NASDAQ before it was sold, Starboard managed to replace several directors a few years ago; it also came into conflict with DSPG’s board of directors in 2011 after it pushed for the streamlining and sale of the company, managed to replace directors and finally reached a compromise according to which directors operating on behalf of the fund were appointed.
Joseph Papa left his post as Perrigo’s chief executive officer to take the top spot at Valeant Pharmaceuticals International Inc.in May, and his successor cut the company’s forecasts, calling them unrealistic. A representative for Perrigo didn’t immediately answer phone calls seeking comment outside regular business hours.
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Starboard indicated it will not be patient awaiting a more detailed plan for changes from the chief executive.
