Starboard Says Depomed Should Consider Selling Itself
09 April 2016 - 12:50AM
Dow Jones News
Starboard Value LP said Depomed Inc. should consider selling
itself in a letter to the pharmaceutical company's board a day
after disclosing a stake in the maker of pain drugs.
The activist investor owns about 6 million shares, or about 9.8%
of Depomed's stock outstanding, when including certain financial
agreements.
"We acquired our position in Depomed because we believe that the
company is substantially undervalued and opportunities exist to
create significant value for shareholders," wrote Jeffrey Smith,
Starboard's chief executive.
Opportunities include improved capital deployment, rationalized
research and development, and a potential sale of the company, he
said.
Depomed responded Friday by saying it "welcomes open
communications with its shareholders and values constructive
input." According to the company, Starboard didn't communicate with
it before revealing its stake Thursday and "has not attempted to
hold any discussions" with Depomed.
Depomed said its board recommends shareholders take no action at
this time.
The New York hedge fund said it would nominate a slate of
candidates to the company's board. In the letter, Starboard accused
the company of suppressing shareholder rights, poor corporate
governance and mishandling the takeover offer from Horizon Pharma
PLC. The firm also called Depomed's continuing lawsuit against
Horizon ill-advised.
"These concerns lead us to believe that management and the board
may be more interested in entrenching themselves than in delivering
maximum value for all shareholders," Mr. Smith said in the letter,
which noted that Depomed's stock had fallen 56%, through Thursday,
from its high in July.
Friday, shares of Depomed rose 19% to $17.84. Depomed
specializes in products that treat pain and central nervous system
disorders.
Depomed is the latest company to come under Starboard's assault.
The hedge fund is embroiled in a proxy fight with Yahoo Inc., has
pushed Macy's Inc. to shed the retailer's real estate holdings and
has taken a stake in Marvell Technology Group Ltd. The firm also
overthrew the board at Darden Restaurants Inc.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
April 08, 2016 10:35 ET (14:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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