Rebel Depomed investor Starboard Value wants a special meeting as soon as possible--and to get its wish, it’s taking matters into its own hands.
The hedge fund, which owns about 9.9% of the California drugmaker’s outstanding shares, has decided to control the timing of the special meeting, rejecting an offer by Depomed to let it call the meeting itself. As Depomed warned, it’ll be a long process for Starboard to go its own route, but the proxy brawler thinks it’s necessary to “prevent Depomed from any further attempts to manipulate our special meeting process and disenfranchise shareholders with needless stratagems,” its CEO, Jeffrey Smith, wrote in a letter to shareholders.
Starboard also has a couple other picks to tack onto its proposed slate of new Depomed directors, which it hopes to install when the special meeting rolls around: Robert Savage, former worldwide chairman for Johnson & Johnson’s pharma group, and James Tyree, former EVP of pharma products at Abbott Labs. But because revising its nominee lineup would create further delays in setting a meeting date, Starboard is bringing them on as advisers for now.
Along with Starboard’s other board picks--a group that currently includes the fund’s own chief exec, Smith, and former Endo skipper Peter Lankau--Savage and Tyree would create “an all-star board that would work diligently and collaboratively to protect and represent the best interests of shareholders,” Smith wrote.
And that's not the only roster tweak Starboard wants to make if it successfully turns over the board. It's willing to include one current Depomed director on the list to "maintain a degree of continuity amidst the required change that we believe is desperately needed at Depomed," Smith said.
Starboard has been railing on Depomed’s corporate governance practices ever since it first took aim at the pain drug specialist. The hedge fund points to Deposed's tactics warding off a hostile takeover by Horizon as an act of “egregiously manipulating the corporate machinery to entrench management and the board.”
And the latest request from Depomed--to let it call the special meeting after Oct. 28, when patent litigation over key drug Nucynta would be all wrapped up--didn’t do much to restore Starboard’s faith.
The way Depomed sees it, though, shareholders need all the facts surrounding Nucynta’s patent life to make an “informed voting decision,” it said last month.
- see the letter at StreetInsider
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