⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Amag settles with activist Caligan, adds two board directors

Published 10/08/2019, 11:33 AM
Updated 10/08/2019, 02:37 PM
© Reuters.  Amag settles with activist Caligan, adds two board directors

By Svea Herbst-Bayliss and Saumya Joseph

(Reuters) - Amag Pharmaceuticals Inc (O:AMAG), whose shares have tumbled more than 45% in the past year, on Tuesday agreed to add two directors proposed by Caligan Partners after the hedge fund pressured the drugmaker to conduct a strategic business review.

Amag, which won U.S. approval for a female libido drug in June, said it will expand its board to 11 people, making room for Caligan Partners' founder David Johnson and Paul Fonteyne, a former head of Boehringer Ingelheim USA.

The hedge fund, which owns a 10.3% stake in Amag, had for months been pressing for changes ranging from cost cuts to possibly splitting up the company or finding partnerships, and had proposed adding four new directors to the board.

Camber Capital Management, Amag's second largest shareholder, also pushed for new board members. Camber did not immediately comment on the settlement.

"As part of Amag's commitment to good corporate governance and ongoing board refreshment, we are pleased to have reached an agreement with Caligan that is in the best interests of all shareholders," Gino Santini, chairman of the board, said in a statement on Tuesday.

A Caligan spokesman had no further comment.

Amag shares trimmed some of their losses in early trading after the settlement was announced. Since January its stock price has fallen 22% and was trading at $11.88 on Tuesday, off about 1.6%.

Amag, which has a market value of $410 million, now offers Vyleesi, the only injectable drug on the market for hypoactive sexual desire disorder in women. But the company lowered its full-year revenue forecast, hurt by dismal sales in its women's health segment.

For Caligan Partners, a New York hedge fund co-founded two years ago by Johnson, a former executive at The Carlyle Group (NASDAQ:CG), and Samuel Merksamer, who worked for legendary activist investor Carl Icahn, the settlement marks the second activist win this year.

In May, the Knowles Corporation settled with Caligan and two other investment managers and added one director to its board.

Companies have tended to try and settle with activist hedge funds, often offering them a few board seats, to avoid the cost and distraction of going to a vote in the proxy contest, academic research has shown.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.