By Svea Herbst-Bayliss
BEVERLY HILLS (Reuters) -Pharmaceutical company Charles River Laboratories has reached a settlement with activist investor Elliott Investment Management to add four new directors to its board and launch a strategic review of the business, two sources familiar with the matter said.
Elliott’s Global Head of Engagement Steven Barg will join the board along with three other independent directors who have expertise in the pharmaceutical industry, said the sources who were not authorized to discuss the confidential agreement publicly.
The agreement could be announced as early as Wednesday, when the Wilmington, Massachusetts-headquartered company is scheduled to release first quarter earnings, the sources said.
Elliott has become the largest investor in Charles River, a top research contractor that helps drug makers with clinical trials and is currently valued at $5.7 billion, but its exact stake could not be determined. The firm’s holding has not been previously reported.
Neither Charles River nor Elliott could be immediately reached for comment.
As part of the settlement, Charles River will initiate a comprehensive strategic review of its business to help push the stock price higher, the sources said, noting this might include finding ways to make the business more efficient among other initiatives.
Charles River’s stock fell last month after the U.S. Food and Drug Administration said it plans to phase out conventional animal testing for monoclonal antibodies and other drugs, focusing on more effective and human-relevant methods. Over the last 52 weeks, the stock price has fallen 51% and closed at $115.41 on Tuesday.
Industry analysts said the April sell-off may have been overdone as they see few changes from the FDA’s plan for at least a few years. Over the last five years, Charles River supported more than 80% of FDA-approved novel drugs.
Elliott, one of the world’s busiest and largest activist investors with roughly $73 billion in assets, has extensive experience investing in healthcare companies including Syneos Health, Cardinal Health and Catalent. Barg, who will join the Charles River board, also sat on the boards of Catalent and Cardinal Health.
Since Elliott’s involvement, Cardinal’s stock price has more than doubled, Catalent was acquired by Danish pharmaceutical company Novo Nordisk at a 40% premium, and Syneos was taken private by Elliott.
(Reporting by Svea Herbst-Bayliss; Editing by Kate Mayberry)
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