Friday, September 19, 2014
Inquirer Daily News

Peace breaks out between Endo Pharmaceuticals, big shareholder

Endo Pharmaceuticals Holdings Inc. has negotiated detente with its biggest shareholder by agreeing to expand its board of directors to eight members by adding a drug industry executive.

Peace breaks out between Endo Pharmaceuticals, big shareholder

New CEO Dave 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 explore a sale of the company.

Today, the D.E. Shaw investment firm agreed not to wage a proxy battle at this year's and next year's annual shareholders' meetings. Endo agreed to 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 Pharmaceuticals Inc. until February, will join Endo's board on June 26.

Here's what Holveck had to say:

I am pleased that Bill Spengler will be joining the Endo board. We look forward to his contribution to Endo's future growth.

And James Mackey of D.E. Shaw certainly seems willing to give the Holveck era a chance:

As long-term shareholders, 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 a shareholder that controls 13.2 million shares, or 9.8 percent of the company. Compare that with the knock-down, drag-out battle between Charming Shoppes Inc. and some of its large shareholders which has resulted in a proxy fight for three seats on the retailer's board.

Sure, we're talking different industries: drugs versus women's apparel. But both companies were perceived by their biggest investors as straying from their expertise. And both investor groups were calling for major changes. It doesn't get more major than sell the company.

These are classic examples of what activist investors try to do. Shake things up.

Endo chose to negotiate, while Charming Shoppes would rather fight. 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 avoided a lot of time and expense repelling what amounts to a different point of view.

Mike Armstrong Inquirer Columnist
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Mike Armstrong Inquirer Columnist
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