Starboard Reportedly Takes 4.6% Stake In Perrigo

(RTTNews) - Starboard Value LP has taken a 4.6% stake in drug maker Perrigo Co. (PRGO), worth nearly $600 million, Wall Street Journal reported, citing a letter sent by the activist investor on Sunday. Starboard is said to criticize the company for failing to live up to its earlier given performance targets, while urging to refocus on its core business.

In response, Perrigo reportedly said in a statement that it would review the letter and it looks forward to a constructive and productive dialogue with Starboard, as it does with all shareholders. In the meantime, the company is said to execute on a number of strategic and operational initiatives.

Starboard reportedly criticized Perrigo for operational and financial missteps since the company rebuffed a $26 billion takeover offer from Mylan NV in 2015.

The producer of generic and over-the-counter drugs fought off a takeover bid from Mylan, stating that its prospects were better alone than as part of another firm. Following which, Starboard noted that Perrigo's shares have plunged and lost more than half their value, and the company has underperformed its peers. Its market capitalization is now $12.7 billion.

Starboard further urged the drug maker to explore a sale of its noncore assets, including prescription pharmaceuticals business and its royalty interest in the Tysabri multiple sclerosis therapy. The investor reportedly argued that Perrigo should focus on its consumer healthcare over-the-counter business and branded products.

According to Starboard, Perrigo's over-the-counter drugs business is a powerhouse in private-label medicines including versions of headache remedy Tylenol, heartburn aid Pepcid and allergy pill Claritin. As per the letter, Perrigo should command a far higher stock-market value but has lost investor confidence.

Further, the hedge fund wants the drug maker to hire advisers to explore the proposed sale and other alternatives.

After almost three years of its campaign, Starboard recently helped to get its most high-profile target, Yahoo! Inc., sold.

On Friday, Perrigo shares declined 2.19 percent to settle at $88.71.