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Perrigo Shares Spike After Starboard Takes 4.6% Stake

Perrigo Company plc PRGO 6.48% acknowledged the receipt of a letter from Starboard Value LP, which disclosed 4.6 percent stake in the company. The company indicated it would review and would look ahead for a productive discussion with the activist investor.

Perrigo reiterated its commitment to delivering value to its shareholders through disciplined execution and transparency.

In a letter to the company, Starboard Value Managing Member, Jeffrey Smith, said, "We believe that Perrigo is deeply undervalued and significant opportunities exist to create value for the benefit of all shareholders based on actions that should be within the control of management and the Board of Directors (the "Board"). We believe changes are needed to reverse the trajectory of poor operating and financial performance and reposition Perrigo for future success."

Smith pointed out that the company took a number of missteps including the rejection of an unsolicited offer from Mylan MYL 3.06% by spending over $100 million in advisor fees to defend its move. He said that if the offer was accepted, it would have allowed the stock to surge 88 percent or more from the current price of about $89.

Starboard said Perrigo failed to deliver the promised results after the rejection of Mylan offer including the mismanagement of Omega Pharma Invest N.V. integration thus losing share value. However, the activist investor believes that the company still has a strong franchise with valuable assets.

Perrigo advanced $3.69, or 4.2 percent, to $92.43.

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.