Starboard Value LP, which last year scored bragging rights among
so-called activist investors by unseating Darden Restaurants Inc.'s
board, is now calling on MedAssets Inc. to overhaul operations—and
its board.
"We question the independence of these directors and believe
some directors may have been on the Board too long to view certain
strategic and managerial decisions objectively or to fairly
consider alternative perspectives," the hedge fund wrote in a
six-page letter signed by managing member Peter A. Feld and sent
Monday to MedAssets' board and Chief Executive R. Halsey Wise.
The New York hedge fund—one of MedAssets' largest shareholders
with 5.2 million shares or about an 8.7% stake—asked the
health-care technology company to give shareholders greater
control, including the ability to call for special meetings and to
act by written consent, which would make it possible for
shareholders to replace directors or change bylaws, for example,
without waiting for an annual or special meeting.
Jeffrey C. Smith's Starboard charged MedAssets' stock is "deeply
undervalued" and outlined a plan to cut expenses and boost the
company's stock to about $37—and as much as $46—by the end of
2016.
MedAssets' stock closed Monday at $23.60, up 19% for the
year.
The hedge fund criticized the Georgia company's acquisition
track record, saying that in some cases it bought the companies at
too high a price and failed to integrate them properly, resulting
in duplicate costs.
"While there may be other bolt-on acquisition opportunities for
MedAssets in the future," Starboard said MedAssets ought to focus
on its current operations, considering which areas to invest and
which to divest and using its cash to buy back shares.
The hedge fund, which last month disclosed it had taken a stake
in Macy's Inc. and was joining the push for the 157-year-old
retailer to spin off its real estate, opened its position in
MedAssets in the three months ended June 30, according to
regulatory records.
Starboard had about $4.81 billion under management as of March
31, according to its most recent 13F filing with the Securities and
Exchange Commission, a quarterly requirement for investors managing
more than $100 million.
MedAssets shares rose nearly 13% in late trading to $26.56,
topping the 52-week-high of $23.90 set on July 30 during regular
trading.
Write to Maria Armental at maria.armental@wsj.com
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