Activist hedge fund angles for Shire breakup to revive struggling shares

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Shire said in August that it was weighing options for its neuroscience franchise.

Shire has hinted that a spinoff of its neuroscience unit may be in the works. But one U.S. hedge fund wants more.

Sachem Head Capital Management, which nabbed a small Shire stake over the summer, is demanding a list of divestments at the Dublin drugmaker, the U.K.’s Sky News reports.

The fund, founded by Bill Ackman protégé Scott Ferguson, hasn’t yet formally penned a letter to the company’s board, but it’s raised the possibility of a larger breakup during discussions with Shire in recent months, Sky’s sources say.

RELATED: Shire disputes employee dissatisfaction report as UBS slashes price target

Sachem Head’s urging comes during a rocky period for Shire shares, which have taken a beating since the company doled out $32 billion for hemophilia specialist Baxalta. While executives have touted the merger’s successand Shire’s progress toward a $700 million cost-savings targetneither markets nor employees seem as confident as management that things are on track,” UBS analysts wrote in August as they slashed their 12-month price target.

And speaking of executives, their ranks at Shire have thinned recently with the departures of R&D chief Phil Vickers and CFO Jeff Poultonand those exits haven’t helped shares, either. “The timing is highly inopportune and serves to exacerbate already negative investor sentiment,” Jefferies analyst David Steinberg wrote to clients after the Poulton announcement in August.

RELATED: Shire hints at ADHD spinoff, but could someone step in and buy the neuro franchise?

Shire has signaled that it may be down for at least a little bit of move-making, revealing in August that it’s “assessing strategic options” for the neuro franchise, which includes the company’s flagship ADHD products. The Irish pharma expects its evaluation to wrap by year’s end.

Meanwhile, divestments across the pharma industry continue. Pfizer last week said it's considering selling off its consumer health unit, and AstraZeneca has notably been selling off drug rights and striking partnerships as it focuses on its core goals.