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| Alere CEO Ron Zwanziger |
Alere ($ALR) is fighting to fend off a major investor seeking seats on its board with eyes on splitting up the company, and, in its latest gambit to win over shareholders, the diagnostics outfit is questioning the aptitude of its opponent's co-founder.
Coppersmith Capital Management, owner of about 7% of Alere, believes the company needs to sell off some of its less successful units, cut costs and focus on diagnostics, and Coppersmith has nominated three board members of its own to get the job done.
Alere's management believes that plan will torpedo the company's value, and, in an effort to convince shareholders, CEO Ron Zwanziger fired off a letter questioning Coppersmith co-founder and board nominee Jerome Lande's track record. At Lande's old job, managing portfolio decisions for MMI Investments, each of the company's three proxy fight victories was followed by underperforming stocks and, in two cases, a dramatic decline in value, Zwanziger wrote.
"Given Mr. Lande's and MMI's poor record of improving stock price performance after a successful election contest, Alere stockholders should have very serious concerns about electing any of Coppersmith's nominees," Zwanziger wrote. "We believe these paid nominees will single-mindedly implement Coppersmith's value-destructive plan to divest and delever at all costs."
Of course, Coppersmith isn't MMI, and Zwanziger explains that he focused on the older company because Coppersmith "has publicly disclosed only very limited information about itself" and "has no track record of its own."
Coppersmith didn't respond to a request for comment Thursday, but the company has said in a past letter that electing its nominees at the Aug. 7 annual meeting could boost Alere's share price between 74% and 136%.
The company wants Alere to auction off its Health Information Solutions business, sell its consumer products joint venture with Proctor & Gamble and consider shipping out its toxicology unit. That would raise almost $4 billion Alere could put toward paying down the mounting debt incurred in "its expansion binge over the past two years," according to Coppersmith.
Zwanziger maintains that Coppersmith's plan would gut the company's profitability and reflects "a failure to understand our business and our industry," while Lande questions Alere's ability to affect its stock performance, saying it has proposed "only feeble half-measures, with no quantified targets or timetables, in what appears to be nothing more than an attempt to placate frustrated stockholders."
The opinions that matter most, however, belong to voting shareholders, and this is likely not the last shot we'll hear before the Aug. 7 election.
- read Alere's letter