Wednesday, December 26, 2007
Cohen's SAC Capital Discloses 7% Stake in Merger Stock Pharmion (PHRM)
Monday, December 24, 2007
Ackman's Pershing Square Boosts Target (TGT) Stake to 9.97%
Much of Ackman's position in held through call options, exercisable through dates ranging from October 2, 2008 to April 6, 2009.
Pershing Square noted that their representatives have met and may in the future meet with Target's management to engage in discussions that may include matters relating to the strategy, business, assets, operations, capital structure and/or financial condition in an effort to enhance shareholder value.
Wednesday, December 19, 2007
Large Enzon (ENZN) Holder DellaCamera Capital Wants Company To Unlock Value
The firm said these options may include the rationalization of the Company's marketed products segment, including the sale of the Abelcet product line, along with the possible monetization of additional Company royalty interests. The firm said Enzon should also consider structural methods to unlock the value of the Company's LNA development platform.
A Copy of the Letter:
Dear Jeff:We have enjoyed our recent dialogue and correspondence with you. As you are aware, entities advised by DellaCamera Capital Management, LLC (“DCM”) are significant shareholders of Enzon Pharmaceuticals, Inc. (“Enzon” or the “Company”) and currently own in excess of 5% of the Company. DCM’s sizeable investment reflects our steadfast belief in the attractiveness of the Company’s numerous assets. In our opinion, Enzon’s current stock price of $9.75 represents a significant discount to the intrinsic value of the Company and in no way reflects the tremendous embedded optionality associated with Enzon’s R&D pipeline and technology platform. Based upon our recent communications, our sentiments are likely of no surprise to you.
While we are encouraged by your recent efforts to highlight the exciting compounds in development and the extensive intellectual property associated with the Company’s PEGylation platform, it is our opinion that Enzon’s commercial operations alone (its marketed products, royalty streams, and contract manufacturing business) may be worth significantly more than the Company’s current share price. To put it another way, the market seems to be currently ascribing negative value to the Company’s R&D pipeline and technology platform. By our calculations, the recent share price of $9.75 implies a shocking negative value of ($263.5 million) for the Company’s R&D operations, as follows:
(1) Enzon has four products on the market that we estimate will generate approximately $100 million of revenue in 2007. Assigning a reasonable pharmaceutical sales multiple of 3.5x yields a value of $350 million for the marketed products.
(2) Enzon recently sold a 25% interest in its royalty from PEG-Intron for $92.5 million, and may potentially receive an additional one-time milestone payment of $15 million. Assuming this $15 million has a present value of $7.5 million, Enzon effectively received $100 million in value for its 25% interest, implying a $400 million value for the entire PEG-Intron stake, or $300 million for Enzon’s remaining 75% interest. Enzon also receives royalties associated with the sale of Pegasys and Macugen and will derive royalty revenue upon the successful approval and launch of Cimzia and Hematide. We approximate the value of the Pegasys, Macugen, Cimzia, and Hematide royalty streams at $100 million, implying (together with the $300 million of value for Enzon’s PEG-Intron stake) a $400 million total value for Enzon’s royalty segment
(3) We estimate that Enzon will derive $16 million in revenue from its contract manufacturing business in 2007. Applying a 2.5x revenue multiple, which is an approximate 1.0x multiple discount to Lonza Group AG, yields an incremental $40 million of value for the Company’s contract manufacturing business.
This is a troubling value disconnect, especially when one considers the array of compounds that Enzon has in clinical trials and the Company’s extensive PEGylation expertise, in addition to Enzon’s locked nucleic acid (LNA) efforts. Indeed, there are publicly-traded biotechnology companies with multi-hundred-million dollar market values that do not possess as broad a pipeline as Enzon. While drug development is inherently unpredictable, in today’s environment there are certain overarching factors that heighten the value that may be ascribed to development-stage compounds. Consider the well-publicized dearth of product that is plaguing many pharmaceutical and biotech companies; one need only note the significant control premium afforded companies such as Medimmune, Pharmion, and MGI Pharma to understand the desire of pharmaceutical companies to replenish their existing pipelines. Given this current favorable environment, Enzon can no longer allow its pipeline and R&D efforts to be afforded negative value by the marketplace.
It is our belief that the corporate structure and operational complexity of Enzon have made it difficult for the investment community to accurately assess the inherent value of the Company. Enzon in its current form is an amalgam of two distinct businesses: (1) a commercial business comprised of marketed products, royalties, and contract manufacturing; and (2) an R&D organization and technology platform. The profitability of the commercial operations is being completely obscured by the expenses associated with advancing the Company’s clinical and pre-clinical programs. As such, the Company does not appeal to any distinct investor constituency. Furthermore, we believe that the pursuit of activities across multiple business segments has led to substantial operational inefficiencies, resulting in expenses far in excess of acceptable levels. For example, Enzon has only four marketed products yet has to shoulder the expenses associated with two completely distinct sales forces, with one sales force devoted entirely to the marketing of one single product, Abelcet.
It is clear to us that there may be many ways for Enzon to narrow the significant discount to intrinsic value at which the Company is currently trading. Given the array of alternatives available, we believe that the Board of Directors (the “Board”) must engage the services of a reputable, nationally-recognized financial advisor to provide impartial assistance in analyzing various financial and structural options and implement a cohesive financial plan of action that would deliver increased value to the shareholders. These options may include the rationalization of the Company’s marketed products segment, including the sale of the Abelcet product line, along with the possible monetization of additional Company royalty interests. Furthermore, Enzon should consider structural methods to unlock the value of the Company’s LNA development platform. Indeed, a number of publicly-traded biotechnology companies have attempted to creatively highlight the value of their own RNA-interference efforts, an area which has generated great enthusiasm from the scientific and investment community.
Though we reserve all of our rights to protect the value of our investment, it is our preference to work constructively with management and the Board to ensure that maximum value is delivered to the shareholders of Enzon. As such, we wish to continue our discussions with you and hope to expand upon this dialogue to include the Board. We look forward to speaking with you in the very near future.
Richard P. Mansouri
Peltz Builds Up 10% Stake in Cheesecake Factory (CAKE)
Monday, December 17, 2007
Jana Partners Boosts Copart (CPRT) Stake Above 5%, Files 13D
Friday, December 14, 2007
Shamrock Wants Panera (PNRA) Staggered Board Declassified, Buybacks Among Other Things
Ramius Capital Accumulates 7.4% Stake in Federal Signal (FSS)
Wednesday, December 12, 2007
Highland Capital Wants PDL BioPharma (PDLI) To Hire A New Advisor For Sale Process
Highland Capital said Merrill Lynch appears incapable or unwilling to market the royalty stream to all appropriate buyers, which they believe will impair the value of the asset. Highland Capital named a number of firms, including themselves, that desire to be included in the auction.
Highland Capital said, "The recent sell down by your most vocal shareholder should not invite the Board of Directors to ignore its fiduciary duty to the company's owners." Highland is clearly pointing to Daniel Loeb's Third Point LLC, which recently sold its entire stake in the PDL.
Shares of PDL are up 2% top $18.39 today.
Copy of the Letter:
Ladies and Gentlemen:
We acknowledge the progress the Board of Directors has made towards achieving the objectives outlined in the October 1st press release and continue to believe that an expeditious sale of PDL Biopharma, Inc. (“PDL”) as a whole or the monetization of its key assets will generate significant value for shareholders. As you are obviously aware, the recent sell-off in the stock has further widened the gap between the company’s public-market valuation and intrinsic value, making the Board of Director’s task even more relevant. The recent sell down by your most vocal shareholder should not invite the Board of Directors to ignore its fiduciary duty to the company’s owners. Rest assured that Highland is closely monitoring the process with a view towards protecting our investor’s best interests.
In our previous communication we encouraged the Board of Directors to retain additional expertise in evaluating its most valuable asset, the royalty stream. As you know, PDL’s royalty stream is a complex financial asset most comparable to a bond and in our opinion should be marketed as such if maximum value is to be achieved. Thus, we recommend that the Board of Directors engage an advisor with substantial experience and demonstrable competence with these esoteric assets. We do not believe the advisor selected by the Board of Directors is so qualified. When pressed on a recent conference call, Merrill Lynch could not name a single successful pharmaceutical royalty securitization transaction it had consummated. Their status as a leader in the mortgage securitization marketplace is irrelevant given the unique cash flow characteristics and buyer pool of pharmaceutical royalty streams.
While the current advisor’s lack of experience with pharmaceutical royalties is reason enough to seek additional counsel, recent developments lead us to believe that the Board of Directors should seek additional assistance immediately. Pointedly, the current advisor appears incapable or unwilling to market the royalty stream to all appropriate buyers, which we believe will impair the value of the asset. In fact, we understand that many well-known leading buyers of pharmaceutical royalty streams have been denied diligence materials to assist them with valuing the asset. Based on our experience, a substantial universe of savvy, well-capitalized investors would include Farallon Capital Management, HBK Investments, QVT Financial, Marathon Asset Management, Perry Capital, McDonnell Investment Management, Taconic Capital Advisors, and Apollo Investment Corp; these parties and others should be given the full opportunity to enter into a confidentiality agreement in order to evaluate the company’s assets. Furthermore, Highland Capital Management has been excluded from this process, which we find particularly concerning given our status as a significant equity owner and participant in the pharmaceutical royalty securitization market. Highland Capital Management desires to be included in this auction, is willing to sign a confidentiality agreement, and will dedicate substantial resources to evaluate these assets in a most expeditious manner. We believe the prosecution of the asset sales thus far to be a breach of fiduciary responsibility by both Merrill Lynch and the Board of Directors.
Finally, we believe the current advisor may be rushing to achieve a transaction that we would view as suboptimal. It is our understanding that the final bid date for the royalty auction has been set for December 19th. Additionally, based on our market reconnaissance, we believe that the field of bidders has been effectively limited to one party, leading us to believe that the process is not competitive and will result in a suboptimal outcome if allowed to proceed. We believe the auction should be conducted in early 2008, with a pre-arranged financing package available for any potential buyer — a successful royalty stream auction tool that a more experienced advisor routinely provides.
With the proper guidance, we believe the Board of Directors can deliver an optimal outcome to shareholders. We reiterate our demand that the Board of Directors take appropriate actions to honor its fiduciary obligations to PDL’s shareholders.
President and CEO
Highland Capital Management
Brinks (BCO) Holder MMI Wants To Assist In Strategic Review
From the letter, "We read with interest the announcement of Monitor Group's retention by The Brink's Company "to assist in the ongoing evaluation of the various strategic options available to the company." During our more than four years as one of the largest owners of Brink's we have spent extensive time and effort scrutinizing Brink's chronic undervaluation and attempting to unlock the company’s significant intrinsic value through the encouragement of strategic alternatives. We believe Monitor Group would benefit from our experience and insights on these issues and would appreciate the opportunity to communicate with your team directly."
Chapman Capital Cuts Stake in Building Materials (BLG)
The firm said they sold stock in November and December of 2007 in order to satisfy the Funds' tax planning.
Monday, December 10, 2007
Clinton Group Accumulates 7.2% Stake in Sharper Image (SHRP)
In a pretty standard disclosure, the firm did not make any direct requests on the company, but said they will monitor their investment and may enter discussions with management, the Board of Directors or others.
Sharper Image has been a struggling retailer for some time. The stock is down 64% YTD and 82% over the last 5 years.
About 31% of the float is short.
Nelson Peltz' Trian Raises Stake in Cadbury Schweppes (CSG)
Philips (PHG) Shares Up Today After Two Strong Activists Join Forces
Philips is trading up over 4% today on the news.
Indian Hotels Raises Stake in Orient-Express (OEH), Seeks Talks; Faber Said Things Heating Up
Friday, December 07, 2007
Jove Partners Raises Stake in Lifetime Brands (LCUT) TO 7.8%
The firm also disclosed a letter to the company saying they have been encouraged by its renewed effort to increase cash generation and optimize capital allocation. The firm is also pleased by the expanded buyback and election of David Dangoor to the board of directors.
From the Letter: "we are encouraged by your company's renewed effort to increase cash generation and optimize capital allocation. We believe that the proposed inventory reduction plan will incentivize employees to limit the resources tied up in product and provide Lifetime Brands with significant improvements in working capital. We anticipate that the announced closing of marginal and unprofitable retail operations will free-up capital and allow your management team to enhance its focus on the core business. In addition, we expect that the consolidation of your company's West Coast warehouse facilities will improve operations and, combined with the sale of your former headquarters, strengthen the balance sheet. We also fully support the plan to expand Lifetime Brands' share repurchases."
British Billionaire Lewis Raises Stake in Bear Stearns to 8% (BSC)
Lewis is a British billionaire and is the 486th richest person in the world according to Forbes' 2006 list.
Wednesday, December 05, 2007
Pennant Capital Said Axcan Pharma (AXCA) Buyout Price Too Low
Tuesday, December 04, 2007
Shamrock Activist Value Fund Raises Stake in Websense (WBSN) 6.1%
Large NetManage (NETM) Holder Riley Investment Discusses Concerns About CEO and Seeks Sale of the Co
SuttonBrook Capital Accumulates 5.8% Stake in M&A Casualty United Rentals (URI)
Farallon Capital Discloses 5.3% Stake in California Pizza Kitchen (CPKI)
Monday, December 03, 2007
Loeb's Third Point LLC Lowers Stake in Atmel (ATML) Below 5%
Loeb's firm held 35 million shares of Atmel at the quarter ended September 30, 2007.
Loeb's firm sold large blocks of Atmel stock from 10/11 thru 11/30 at prices from $5.80-$4.39.
Because Loeb's firm is below the 5% threshold, he will not be required to file updated 13Ds on the position.
Atmel has not been a winning trade for Loeb. The original 13D, filed in July, showed Loeb paid an average of about $5.45 per share for the stock. It is currently at $4.42.