Catalent reaches settlement with Elliot to explore strategic review


Catalent reaches settlement with Elliot to explore strategic review

By Svea Herbst-Bayliss and Sriparna Roy

Aug 29 (Reuters) – Contract drug maker Catalent Inc. (CTLT.N) said on Tuesday it had added four new directors to its board and will conduct a strategic review after reaching a settlement with activist investor Elliott Investment Management.

The company, which has for months been the target of takeover interest from both private equity firms and strategic buyers, also reported a double-digit drop in quarterly revenue and said it would delay its annual report.

Catalent’s stock price, which has lost nearly half its value in the last year, dipped on the earnings news and then moved higher in pre-market trading on news of the deal with Elliott, which confirmed a Reuters report on Monday.

The U.S.-based contract drugmaker is Danish company Novo Nordisk’s (NOVOb.CO) main manufacturing partner for its popular weight-loss drug Wegovy.

The company named three pharmaceutical industry executives and a senior Elliott executive to its board and said John Greisch, who has served on the board since 2018, will become executive chairman.

The board, which had 12 members, will have 16 members for a few months but will shrink back to 12 when a number of current directors retire, sources familiar with the matter said.

Elliott is one of Catalent’s biggest investors and has been engaging with the company behind the scenes for months.

The board seats will give the activist investor, one of the industry’s busiest, a say in determining future strategy, including a possible sale of the entire company, sources familiar with the matter said.

Catalent, which has been seeking to return to growth and cut costs as production snags and regulatory inspections at three major facilities hit profit margins, said quarterly revenue fell 17%, hurt by persistent production-related challenges.

Reuters reported on Monday that a settlement was close and that a strategic review, including a possible sale of the company would be undertaken.

Elliott’s global head of engagement, Steven Barg, a former Goldman Sachs banker, will join Catalent’s board along with former Pfizer chief financial officer Frank D’Amelio, former Genzyme executive Stephanie Okey and Michelle Ryan, a former Johnson & Johnson executive.

Catalent is also forming a new strategic and operational review committee which Greisch will chair.

“Our Board shares Elliott’s confidence in the long-term value creation potential of Catalent,” Greisch said in a statement.

Reporting by Svea Herbst-Bayliss in Boston, Maggie Fick in London and Sriparna Roy in Bengaluru; Editing by Shinjini Ganguli and Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.

Source: Reuters