Perrigo Shareholder Seeks Change for Improved Performance
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Starboard Value LP, an investment firm with a 4.6% stake in Perrigo, a generic, over-the-counter and specialty pharmaceutical company, has issued a letter to Perrigo’s chief executive officer (CEO), John Hendrickson, and Perrigo’s board of director to begin what it termed a “constructive engagement” to drive value creation for the company’s shareholders.

In its letter, Starboard said: “We believe that Perrigo is deeply undervalued and significant opportunities exist to create value for the benefit of all shareholders based on actions that should be within the control of management and the Board of Directors We believe changes are needed to reverse the trajectory of poor operating and financial performance and reposition Perrigo for future success.”

In outining the recent performance of Perrigo, Starboard took issue with Perrigo’s decision to reject an offer by Mylan to acquire the company, a process that began in April 2015 and ended in November 2015 .Mylan lost its approximate $26 billion takeover bid to acquire Perrigo after failing to tender at least 50% of Perrigo ordinary shares from Perrigo shareholders. Mylan had secured 40% of Perrigo ordinary share in a tender offer, which lapsed on November 13, 2015. The rejection by Perrigo shareholders of Mylan’s takeover bid put to rest a seven-month effort by Mylan to acquire Perrigo. The investment firm said in its letter that Perrigo had failed to deliver on financial and stock-price performance goals that it had promised in making the decision to reject Mylan’s acquisition proposal.

Ealrier this year in April, John Papas, then chairman and CEO of Perrigo, left the company to join Valeant Pharmaceuticals as its chairman and CEO. Hendrickson, formerly president of Perrigo Corporation and holding various management and leadership roles with the company since 1989, became CEO of Perrigo.

In its letter, Starboard is urging the CEO to take actions to improve the financiap performance of the company. “Perrigo needs real improvements and not incremental promises. The last two earnings calls since being appointed CEO have provided successive, substantial guidance reductions without illustrating a path forward. Surely, given your long tenure at Perrigo, you have an assessment of the issues Perrigo faces and should be able to provide shareholders with substantial insights into how you intend to materially and immediately address these pressing issues.”

In a statement, Perrigo acknowledged the receipt of the letter from Starboard.”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. Perrigo also reiterates its commitment to disciplined execution; transparency with its shareholders, customers, and employees; and, above all, to delivering value for its shareholders.

Source: Perrigo and Starboard Value

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