New Plea for PDL BioPharma to Sell
By DANA CIMILLUCA
September 26, 2007; Page C3
Another hedge-fund shareholder is trying to force PDL BioPharma Inc. to sell itself.
Highland Capital Management LP sent a letter late yesterday to the Fremont, Calif., biotechnology company's board, calling for an auction and for the chairman, Patrick Gage, to resign.
• News: Another hedge-fund investor has stepped up to pressure California drug company PDL BioPharma.
• Backstory: Other hedge funds already have been buying shares of the company, agitating for change.
• What's Next: The company says it's moving to boost shareholder value. CEO Mark McDade has already said he will step down -- but when?Highland also has increased its stake in PDL, which has a market capitalization of $2.4 billion, to 4.7% from 3.5% in June, according to the letter, a copy of which was reviewed by The Wall Street Journal.
Others Gathered
Highland joins Daniel Loeb's Third Point LLC and SAC Capital Management in amassing a large stake in the company. SAC disclosed a 5.1% passive stake in PDL this month.
It is unclear who might want to buy the company, which shares the rights to some drugs with Biogen Idec Inc. It also may not be the best time to look for a buyer, with the mergers-and-acquisitions market moribund.
The stepped-up pressure on PDL comes less than a month after the company announced plans to sell assets and to scrap the development of late-stage ulcerative-colitis drug Nuvion. Its shares plunged 20% on that news. In 4 p.m. composite trading on the Nasdaq Stock Market yesterday, the company's shares were down 1.3%, or 26 cents, to $20.80. The stock is down 25% from its peak of $27.70 in June.
"We insist the board move rapidly to undertake deliberate action to maximize shareholder value and to mitigate the franchise deterioration that occurs when direction is unclear and alternatives are unexplored," the Highland letter states.
Company Has 'Urgency'
"We're in the process of assessing all strategic alternatives with urgency in an effort to boost long-term shareholder value," a PDL spokeswoman said.
Third Point's Mr. Loeb, who is known for penning letters to companies whose shares he owns, had a 10% stake in PDL at the end of August, according to FactSet Research Systems Inc.
According to the latest letter, Highland wants PDL Chief Executive Officer Mark McDade to resign immediately. Mr. McDade already announced he will step down.
Write to Dana Cimilluca at dana.cimilluca@wsj.com |
