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TheStreet Open House

ConMed Proxy Contest E-mails Reveal Bitter Fight

Stocks in this article: CNMD

NEW YORK ( The Deal) -- With a proxy contest at ConMed (CNMD)  only two weeks away, a strong e-mail exchange between the surgical device maker and activist Voce Capital Management LLC indicate that an agreement before the vote may be tough to come by.

After Voce offered on Monday to settle for two seats on the board of the Utica, N.Y.-based company and then withdrew it, citing a lack of response, ConMed chairman Mark Tryniski fired back in an e-mail filed with the Securities and Exchange Commission Tuesday, "I was surprised to see your press release cross the wire this morning at 9:00am ET. In your email to me at 9:30am ET yesterday you asked for a response within 24 hours."

Voce's two nominees he wants on the board are James Green, president and CEO of Analogic Corp. and Joshua Levine, CEO of Accuray Inc. In exchange Plants would have agreed to drop his contest to seat three dissidents on the company's eight person board.

In response to Tryniski's public release of his email, Plants also made public late Tuesday through a regulatory filing a string of emails between himself and Tryniski going back to July 25. Pointing out that an extra 25 minutes wouldn't have made any difference, Plants wrote, "If you mean to suggest that the extra 25 minutes you believe you had remaining would have resulted in a substantive response (I notice your email didn't contain one), why don't you go ahead and make it now?"

The investor also noted that his press release followed a phone conversation with Tryniski more than 24 hours prior to his press release and that if ConMed's board needed more time Tryniski could have "simply advised us" and Voce would have extended the time frame needed.

The e-mail exchange seems to indicate that a settlement won't be reached -- at least in the interim -- and sets the stage for a proxy contest, which is scheduled for Sept. 10 after being pushed back from May 22.

Plants in February launched a proxy contest to install five directors on the company's eight-person board. More recently, the activist fund manager dropped his slate to three candidates, saying that the company has made some positive changes including personnel adjustments, leading him to think the company didn't need a change of control at this point. He is pushing for a strategic review because he believes Conmed "suffers from a culture of nepotism, patronage and dystopian corporate governance."

The company in July restructured its leadership, which included CEO Joseph Corasanti stepping down to be replaced by Curt Hartman as an interim CEO. It also announced that the company had concluded a review of its strategic alternatives including a sale and that "various strategic alternatives available" at the time did not "adequately reflect the intrinsic value of the company or its future growth prospects." Corasanti is a member of the family that founded ConMed in the 1970s. Bank of America Merrill Lynch and Greenhill & Co. LLC acted as ConMed's financial advisors during the process.

However, people familiar with Voce have raised concerns about whether the company conducted a thorough review process. Voce is also concerned about whether ConMed is serious about finding an adequate replacement for Hartman on the board, these people added.

Hartman, the interim CEO, is one of two dissident directors nominated by another activist fund, Coppersmith Capital Management LLC, which settled with ConMed to get on the board in February.

The company notes that Hartman had a 22-year career at medical device maker Stryker Corp. from 1990 through the beginning of 2013, serving as interim CEO for several months in 2012.

However, Plants is particularly critical of the Hartman appointment, and has highlighted a regulatory filing in another Coppersmith activist campaign at health diagnostics company Alere Inc. (Coppersmith had also tried to install Hartman on that board.)

In an August 2013 securities filing Alere said, "Hartman was the subject of multiple allegations of sexual harassment during his tenure at Stryker and that these allegations were settled confidentially for substantial monetary payments."

A ConMed representative said, "Voce has recycled allegations made against Curt Hartman by another company that are false and misleading. Curt has the utmost personal and professional integrity and the baseless claims have been refuted in detail in the public record."

Coppersmith in August 2013 issued a release stating that there is "no merit whatsoever to any of their accusations" and that Hartman is a man of the "highest personal and professional integrity."

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