Starboard Takes Elanco Stake, Nominates Three to Its Board -- Update
By Cara Lombardo
Activist investor Starboard Value LP has taken a stake in Elanco
Animal Health Inc. and nominated three directors to the company's
board, according to people familiar with the matter.
Elanco, which makes vaccines and treatments for pets and
livestock, has a market value of about $15 billion. The exact size
of Starboard's stake -- and specifically what the fund intends to
advocate at Elanco -- couldn't be learned, though it tends to make
sizable investments in companies it targets.
Starboard would be the second activist to apply pressure to
Elanco recently: The company was targeted last year by Sachem Head
Capital Management, which owns a roughly 5.9% stake. The hedge
fund's founder, Scott Ferguson, now sits on Elanco's 13-person
board, having gained the seat as part of a December settlement that
also added another director and expanded the mandate of a board
committee to include improving margins.
Greenfield, Ind.-based Elanco was a division of Eli Lilly &
Co. until the drugmaker spun it out in an initial public offering
in 2018. Less than a year later, Elanco struck a deal to buy Bayer
AG's animal health business for over $7 billion. The company has
said the deal, which closed last year, will double its pet business
and strengthen its presence in emerging markets and in the cattle
The company's shares have recovered since dropping along with
the rest of the market in the early days of the coronavirus
pandemic, but are trading below where they debuted in September
In January, Elanco said it would eliminate 350 positions and
close a handful of research-and-development sites to reap cost
savings following the merger. When reporting fourth-quarter
earnings last month, the company increased its 2021 guidance to
revenue of between $4.55 billion and $4.63 billion and adjusted
per-share earnings of 90 cents to $1.
The deadline to nominate directors at Elanco was Feb. 20. If
Starboard and Elanco fail to reach a settlement agreement, Elanco
shareholders would vote on the potential directors at the company's
annual meeting this spring.
Activist investors laid low in 2020 as Covid-19 upended business
as usual and brought more volatility to the markets. But they
appear to be back in full force this proxy season, striking
settlements or pursuing proxy fights at companies including Bausch
Health Cos., Exxon Mobil Corp. and Kohl's Corp. Starboard,
typically one of the busiest activists, late last year nominated
directors at agricultural giant Corteva Inc.
Write to Cara Lombardo at email@example.com
(END) Dow Jones Newswires
March 03, 2021 14:08 ET (19:08 GMT)
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