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Clarification: The names of the companies were corrected in the third paragraph.

Pharmaceutical company Perrigo (PRGO) - Get Perrigo Co. Plc Report has settled with activist investor Starboard Value, agreeing to install Starboard CEO Jeffrey Smith and two others to the board. Starboard will also recommend two additional directors.

The agreement, announced Tuesday, also includes certain customary standstill restrictions. Shares of Perrigo were trading at $78.40 on Tuesday morning, up 0.4%.

Smith, along Advent International operating partner Bradley Alford and Lux Capital venture partner Jeffrey Kindler, are joining Perrigo's board effective immediately. Herman Morris, Shlomo Yanai, Michael Jandernoa and Gary Kunkle are stepping down as directors.

Dublin-based Perrigo will have a 10-person board until the additional director is appointed. Ellen Hoffing will leave the board at a later date, when the second additional director recommended by Starboard is appointed.

In September, Starboard sent a letter to Perrigo CEO John Hendrickson, urging the company to make "material changes," possibly including divesting a couple non-core assets.

Starboard, which reported a 4.6% stake at the time, pointed to two non-core assets as units that could be put up for sale, adding that the company could benefit from outside advice from a investment bank or adviser on the assets. For example, Starboard said that Perrigo's prescription pharmaceuticals business, which develops and manufactures generic and specialty drug products, has few synergies with the company's core over-the-counter products business. In addition, Perrigo owns a royalty interest on global sales of Tysabri, a therapy for multiple sclerosis.

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On Nov. 10, Perrigo said, as part of its ongoing business portfolio review, it has hired Morgan Stanley to lead a review of strategic alternatives for the rights to the royalty stream from sales of Tysabri.

Starboard, on Nov. 14, filed a 13D with the Securities and Exchange Commission, reporting a 6.2% stake in Perrigo.

In a statement Tuesday, Perrigo Chairman Laurie Brlas said, "Since our respective appointments in April 2016, John Hendrickson and I have been committed to bringing new energy and fresh perspectives to Perrigo.  We are pleased to have reached this agreement with Starboard and look forward to working closely with the new directors to create value for our shareholders."

"Brad Alford and Jeff Kindler bring important experience, expertise and perspectives to Perrigo, and I look forward to getting started right away and working closely with management and fellow board members with the common goal of maximizing value for all shareholders," Smith said in the news release.

Olshan Frome Wolosky LLP's Steve Wolosky, Andrew Freedman and Meagan Reda served as legal counsel to Starboard. Wachtell, Lipton, Rosen & Katz's Igor Kirman served as legal adviser to Perrigo.

Perrigo isn't the only drug company that was targeted by Starboard. In October, pain-medication maker DepoMed (DEPO) announced a deal with Starboard to add three directors appointed by the activist investor.


-Ron Orol contributed to this report

This article originally appeared in The Deal, a sister publication of TheStreet.com focused on deals and dealmakers, on Feb. 7. For more information about The Deal click here.