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.
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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 a year ago from Mylan.
Perrigo acknowledged receipt of Smith’s letter and said in a statement released Monday morning that it “looks forward to a constructive and productive dialogue with Starboard”.
Starboard delivered a scathing letter to Perrigo’s chief executive John Hendrickson and its board on Monday, criticizing their performance since the company spurned a $26 billion takeover bid from generic drug maker Mylan NV MYL.O late previous year.
Hendrickson took over the CEO job earlier this year, when Joe Papa left the top role to go to Valeant Pharmaceutical International Inc.
Starboard said the drugmaker should consider hiring an investment bank for advice on selling non-core assets or broader strategic alternatives. RBC has a “sector perform” rating on the stock.
Starboard, in a letter to Perrigo’s chief executive and board on Monday, called the company “deeply undervalued”.
Starboard, which said it had been hopeful for “fresh ideas” from new CEO John Hendrickson, noted he has worked at Perrigo for about 27 years and “to date, no new plans have been announced for a meaningful change in strategic direction or operational excellence”.
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Starboard is among the most aggressive activist hedge funds. 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.
