PDL Biopharma Inc.
(NDAQ:PDLI) moved up marginally after activist investor Third Point
disclosed a 9.8% stake in the company and asked the unconflicted
directors of PDL BioPharma to conclude their investigation into CEO
McDade's suspected ethical and business breaches as quickly as
possible. The hedge fund also nominated BioMarin Pharmaceuticals CEO
Jean-Jacques Bienaime to their proposed slate of directors.
The
letter address to board members was a follow up to one sent out
privately three weeks earlier. In the letter, Third Point suggested
that shareholders could best be served through the termination of CEO
McDade, the addition of three shareholder representatives to the
company's board, and finally the hiring of an investment bank to
explore strategic options for the company.
The adoption of
these three recommendations would substantially increase the company's
share price. Obviously, if the company formally announced that it was
exploring a possible sale it would cause a quick jump while the firing
of McDade and inclusion of shareholder representation on the board is
definition bullish in the long-term.
The problem is simply the
McDade has tight control over the board as well as management - a
classic agency problem. The only way to effect change may be through a
proxy fight, which is always a possibility with Third Point. Combined,
these factors make PDLI a stock
worth watching!
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