Shire Under Pressure to Break Up the Business

Shire

Sachem Head Capital Management, a hedge fund with a large interest in Shire Plc, is pushing for that company to break up into small entities in order to increase shareholder value.

Britain’s Sky News reported over the weekend that the activist hedge fund, which acquired its interest in Shire earlier this year, is urging the company to “to explore a sale or spin-off of several of its assets.” Nothing formal has been put into writing, but Sky News sources said the investors have made it known that is what they would like to see, according to a Proactive Investors report. Sachem did not reply to questions from Sky News or other publications seeking comment.

Over the past year, share prices of Shire have fallen from a high of $190.70 in October 2016 to a low of $140.85 this past August. Shares are trading at $148.47 as of 9:42 a.m.

Some Shire investors have been critical of the company since its 2015 acquisition of Baxalta. Some of Shire’s investors have expressed criticism since the deal has not sparked the revenue stream many hoped for. A United Bank of Scotland analysis of Shire saw a reduction of its price target on company stock.

Proactive said Shire Chief Executive Officer Flemming Ornskov has hinted at possibly spinning off the company’s neuroscience division, but so far that has been it. In August, Ornskov said a decision about the possible spin off or sale would be made by the end of the year, Sky News noted.

Shire has remained mum on the possibility of any other action. In a response to Sky News, the company said it has a history of “open and active engagement” with its shareholders. Additionally, the company told the British publication that its board listens and considers “ideas about enhancing value for all shareholders.”

While Sachem is pushing for some kind of spinoff action, there has been a thinning of the ranks among Shire’s executive team. In August, Shire Chief Financial Officer Jeffrey Poulton announced he was leaving the company in order to take over the CFO spot at Indigo Ag Inc., a startup agriculture company that spun out of Flagship Pioneering

Former human resources head Ginger Gregory left Shire for Biogen. Phil Vickers the head of Shire’s research and development teams also left the company over the summer.

Shire began 2017 with the divestment of its MRT program. Shire sold the program, which includes 12 employees and two mRNA therapy platforms, to RaNA Therapeutics.

Sachem Head was founded by Scott Ferguson, a former protégé of famed biotech investor Bill Ackman. In addition to investments in Shire, Sachem Head also has holdings in Celgene and Allergan, Sky News noted.

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