Starboard Value's Jeff Smith on Thursday launched an activist campaign at Parexel International, (PRXL)   urging the multinational life sciences consulting firm to complete a "robust" review and a sale of the business, in a move that comes after reports that the company may be working with investment bankers to auction itself.

According to an activist 13D filing, Smith reported owning a 5.7% stake and also suggested that there were substantial opportunities to improve Parexel's operating margins. The fund argued that there was a significant "disparity" between its operating margins and those of its peers.

The fund's efforts come in the wake of reports that Parexel is working with investment bankers to explore a sale of the company. Smith noted, in the filing, that if a "legitimate, robust" process was run that he believed that there would be "significant strategic and financial buyer interest."

Parexel said in a statement that its management team are "committed to serving the best interest" of the company and shareholders. It added that its board and management "regularly consider the strategic direction of the company."

Parexel has a $3.8 billion market capitalization. Its share price was up about 0.28% to $74.72 a share in pre-market trading on the news.

Also, Starboard Value said it retained D. Jamie Macdonald, a former CEO of Inc. Research Holdings, as an adviser regarding the pharmaceutical and healthcare industry. Starboard Value often hires advisers specializing in the particular sector of the company it is targeting. For example, Starboard hired advisers at MeadWestvaco Corp. and Darden Restaurants. (DRI) in advance of launching campaigns at those companies. The advisers can be called on to become director-candidates for Smith if he escalates his campaign into a director-election proxy contest.

If a sale isn't forthcoming, it is a very real possibility that Smith could launch a director battle to help drive his sale-focused agenda. Starboard is among the most prolific employers of proxy contests to push its share-price improving agenda forward. The fund's proxy contest last year at Yahoo  (YHOO)   and a subsequent settlement that installed four dissident directors was a key driver in pushing the technology company into a sale to Verizon in July. According to FactSet, Starboard and its predecessor, Ramius LLC's activist fund, have engaged in 60 proxy fights since 1994.

At Parexel, Starboard would likely have only one option for a director-battle, the company's 2017 annual meeting, which is expected in December. As a result, the fund would need have an opportunity to nominate directors between Sept. 9 and Oct. 9 for the meeting.

Also, there are at least two other substantial activists that own shares in the life sciences company and are also likely agitating for a sale. Jana Partners' Barry Rosenstein owns a 1.5% stake, according to FactSet. In addition, the Wall Street Journal reports that Corvex Management's Keith Meister has built a substantial stake as well. 

So expect that Parexel would need to complete its auction and review process in advance of the October deadline. Otherwise a director battle is a real possibility.

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