NEW YORK—A major shareholder urged drug maker Endo Pharmaceutical Holdings Inc. to evaluate a potential sale of the company before hiring a new chief executive to replace Peter Lankau, who will step down on March 1.
Shareholder D.E. Shaw & Co. LP and its affiliates reported owning 13.2 million Endo shares, representing a 9.8 percent stake in the Chadds Ford, Pa.-based company.
In a letter to Chairman Roger Kimmel, D.E. Shaw expressed concern with Endo's strategic direction and said the company should immediately retain an investment bank to explore strategic alternatives to increase shareholder value.
"We are strongly opposed to the company's strategy of acquiring companies or in-licensing expensive assets, especially in new therapeutic segments outside of the company's core expertise in pain management," D.E. Shaw said. "Endo currently has no head of R&D, and recent development efforts have been marred by numerous setbacks and delays."
If a strategic review does not result in a sale, D.E. Shaw said the company should hire a new CEO committed to cutting costs and maximizing profit. The shareholder said Endo should also repurchase $1.5 billion of its outstanding common equity through a self-tender with existing cash and new debt.
D.E. Shaw noted that the board has refused to meet with the investor. The shareholder said it will consider seeking board representation or taking other action if the company does not address its concerns.
Endo shares fell 20 cents to $27.04 in afternoon trading.
