New CEO David P. Holveck continues to work his magic at Endo Pharmaceuticals Holdings Inc.
Two months ago, the biggest shareholder of Endo was demanding the Chadds Ford drugmaker sell itself.
On Wednesday, the D.E. Shaw investment firm agreed not to wage a proxy battle at this year’s and next year’s annual meetings. In return, Endo will expand its board to eight members, adding a drug industry executive backed by D.E. Shaw.
William F. Spengler, who had been chief financial officer at MGI Pharma Inc. until February, will join Endo’s board on June 26.
What happened in the interim? Mainly, Endo hired Holveck March 12. He was the executive who turned around the region’s biggest biotech firm, Centocor Inc., which was later bought by Johnson & Johnson.
Since he started April 1, Holveck has announced a stock buyback, hired a new R&D head, and begun reviewing the product pipeline.
James Mackey, managing director of D.E. Shaw, certainly seems willing to give the Holveck era a chance:
"We look forward to maintaining a constructive dialogue with Mr. Holveck and have been impressed by the initial steps he has taken to position the company for growth and create value for shareholders."
It’s striking how quickly Endo has been able to reach a compromise with an angry shareholder that controls 13.2 million shares, or 9.8 percent of the company. Compare that with the bruising battle between Charming Shoppes Inc. and several large investors which has led to a fight over three seats on the Bensalem retailer’s board.
Pain medication and women’s apparel are certainly different industries. But both companies were viewed by their biggest investors as straying from their expertise, and they called them on it.
Endo chose to negotiate, while Charming Shoppes fought back. We won’t know which was the better response for a couple of years because a higher stock price is the ultimate goal.
But for sheer reasonableness, Endo looks to have bought itself more time to retool its business.