Activist investor Dan Loeb revealed his Third Point LLC has
built a stake in biotechnology company Amgen Inc. and is calling on
the company to explore breaking into two separate businesses,
according to a letter he sent to Third Point's investors, a common
refrain among activists lately.
Mr. Loeb said at a conference Tuesday that he was a top 15
holder in the company.
In a letter to investors Tuesday, Third Point wrote that Amgen
"has all the hallmarks of a hidden value situation, one of our
favorite investment themes." The biotechnology pioneer has a
"compelling mix" of both established and new products, the letter
said, but trades at a significant discount to peers.
Third Point said the company has several options to unlock value
but is urging Amgen's board to consider "a more radical" option:
breaking up, according to the letter. The investor suggested
splitting the company into a cash-generating mature business and a
faster-growing R&D focused business.
Third Point also suggested value in Amgen "can be easily
unlocked" by making its research and development process more
efficient, making deeper cuts in its "bloated cost structure" and
addressing its deal making. Third Point said it believed most of
Amgen's recent deals would produce "mediocre returns."
A spokeswoman for Amgen didn't immediately respond to a request
for comment.
The letter said Amgen's stock could get to $189 a share by the
end of 2016 and $218 a share by the end of 2017 if the company
completed the work on costs and R&D. But if the company went
forward with a split, Third Point believes the stock could be worth
$249 a share in two years.
Amgen shares jumped 4.2% to $143.27 in recent trading after The
Wall Street Journal reported on the position.
Write to David Benoit at david.benoit@wsj.com and Juliet Chung
at juliet.chung@wsj.com
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