Coppersmith Capital Management, an activist hedge fund, and its managing partner Jerome Lande are pushing the management of Alere Inc (NYSE:ALR) to divest its businesses i order to generate more than $3 billion in proceeds.
Hedge Fund Wants Alere to Sell its Non-core Business
The hedge fund wants Alere Inc (NYSE:ALR) to sell its non-core business, Health Information Solutions, a joint venture with The Procter & Gamble Company (NYSE:PG) and its Toxicology division.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
Coppersmith Capital owns a 5.8 percent stake in the health diagnostics services company. The hedge fund has been pushing for changes at Alere Inc (NYSE:ALR) since last month, and submitted its intention to nominate three individuals for election to the board of directors during the 2013 annual shareholders meeting.
Alere Replaced Four Incumbent Directors
Alere Inc (NYSE:ALR) replaced its four incumbent directors up for re-election with its own slate of new candidates, which prompted Coppersmith Capital to send a letter demanding the divestiture of its businesses.
The hedge fund viewed the action of the management of Alere Inc (NYSE:ALR) asa “defensive, reactionary tactic in the face of an election challenge rather than proactive change.”
Coppersmith Capital emphasized its disappointment with the health diagnostics services company because it demonstrated its willingness to fight “tooth and nail” instead of working constructively to restructure the board for the best interest of the shareholders it represents.
The hedge fund also said that Alere Inc (NYSE:ALR) demonstrated its “commitment to the unacceptable status quo and attempt to avoid stockholder input and real change.”
“This reinforces just how out of touch you are with the serious concerns of the vast number of Alere stockholders…We will state it plainly: stockholders are demanding substantial changes to the company’s strategy and structure, including comprehensive strategic and operational rationalization, not simply a different cast of characters to oversee management’s floundering strategy, structure and performance,” wrote Lande.
Furthermore, Coppersmith Capital pointed out that its proposal to sell Health Information Solutions as well as its Toxicology unit could help lower the company’s debt. In addition, the hedge fund estimated that reducing corporate overhead and spending could generate additional $50 million to $100 million in cost savings annually.
The hedge fund cited that it is evaluating the qualifications of Alere Inc (NYSE:ALR)’s nominees, and reiterated its willingness to work with the company in selecting the best possible candidates to represent the interests of shareholders.