Tuesday was a big day for at least three companies in the cross-hairs of the major activist hedge fund firms.
First of all, shares of Valeant Pharmaceuticals International continued their recent surge, jumping 16.4 percent to close at $109.59. The stock is now up 55 percent since November 17 alone. On Tuesday the embattled drug company announced a new deal with Walgreens. Valeant agreed to distribute more than 30 branded products, where generics are available, through Walgreens at generic prices, giving doctors the ability to make the branded product available to patients at generic prices. This arrangement goes into effect in the second half of 2016 and is expected to reduce prices by 5 percent to 95 percent, or a weighted average of more than 50 percent. In addition, Valeant promised to cut the wholesale prices on certain branded prescription products and over-the-counter products by 10 percent. The 20-year agreement begins in the first quarter of 2016.
“We have listened to what the marketplace is saying and we’ve taken positive steps to respond,” said Michael Pearson, chairman and chief executive officer of Valeant, in a press release. Of course, major investors in Valeant include William Ackman’s New York-based Pershing Square Capital Management and Jeffrey Ubben’s San Francisco-based ValueAct Capital. Barry Rosenstein’s New York-based Jana Partners is the tenth-largest shareholder of Walgreens Boots Alliance, the parent of Walgreens, which is the hedge fund’s third-largest U.S. long position.
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Advance Auto Parts announced that it has retained executive search firm Spencer Stuart to help identify a new chief executive officer. Potential candidates include president George Sherman, who was named interim CEO, effective January 3, 2016. The auto parts retailer said the search process will be overseen by the board’s nominating and corporate governance committee, which includes committee chair Jeffrey Smith, the founder of activist hedge fund firm Starboard Value; lead independent director John Ferraro; and executive chairman Jack Brouillard. Meanwhile, streetinsider.com reported that the company is mulling a possible sale and has been approached by at least one potential acquirer, citing a source familiar with the matter, who said the company could sell for up to $200 per share. Shares of Advance Auto Parts surged 5.80 percent to $156.17. New York-based Starboard owned 2.33 percent of the shares at the end of the third quarter.
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Qualcomm announced that a review conducted by its board’s special committee has decided the company is best off maintaining its current corporate and financial structure. In other words, it decided not to put the chip maker up for sale or break it up.
“The strategic benefits of the current structure will best fuel Qualcomm’s growth as we move through the upcoming technology transitions and extend our technologies into new user experiences, services and industries,” said Steve Mollenkopf, CEO of Qualcomm, in a press release. “The strategic benefits and synergies of our model are not replicable through alternative structures.” Back in July the company announced a restructuring plan that called for $1.4 billion in cost cuts. It also reached an agreement with Jana Partners which resulted in two Jana-approved individuals added to the board — both of whom sat on the special committee — with the promise to add a third that was selected by the company and approved by Jana. The stock, nonetheless, jumped 2.54 percent, to close at $48.02. Jana is the fifth-largest holder of Qualcomm, which is the hedge fund’s largest U.S. long position.
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Jason Karp’s New York-based Tourbillon Capital Partners disclosed that it boosted its stake in American Homes 4 Rent by about 50 percent, to more than 13 million shares, or 6.4 percent of the Agoura Hills, California-based renter of single-family homes.
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New York-based D.E. Shaw disclosed it owns 5 percent of Dynegy, the Houston energy company.
