– The Wall Street Journal (paywall) reported that according to people familiar with the matter, activist investor Starboard Value has taken a roughly $1 bn stake in Pfizer and wants the pharmaceuticals company to make changes to improve its performance: its share price has been roughly cut in half from its record high in late 2021 after the company delivered the world’s first Covid-19 vaccine.
Starboard has approached two former Pfizer executives, Ian Read and Frank D’Amelio, to aid in its efforts, and they have expressed interest in helping, the people familiar with the matter said. Read was Pfizer’s CEO from 2010 to 2018 and picked current CEO Albert Bourla as his successor. D’Amelio was its CFO from 2007 to 2021.
– Days after the WSJ article, CNBC reported that Read and D’Amelio said they would step away from Starboard Value’s campaign at Pfizer. They said they were ‘fully supportive’ of Pfizer CEO Albert Bourla in a joint statement made via an investment bank and confirmed to be authentic. The duo had been in contact with a number of directors shortly before news of Starboard’s stake broke, according to people familiar with the matter.
‘We are confident that over time they will deliver shareholder value,’ the two former executives said of Pfizer’s current board and management. The statement was made through Guggenheim Securities, which has long advised Pfizer on dealmaking. A representative for the bank declined to comment beyond the release.
A representative for Starboard did not immediately return a CNBC request for comment. Representatives for Pfizer did not return requests for comment.
– CNBC reported that Senator Elizabeth Warren, D-Massachusetts, and Rep Madeleine Dean, D-Pennsylvania, are demanding that some of the biggest food and beverage companies stop engaging in ‘shrinkflation’, the practice of reducing product sizes while charging prices that are the same or higher. In pointed letters to the companies, Warren and Dean accuse General Mills, Coca-Cola and PepsiCo of engaging in a ‘pattern of profiteering’ through shrinkflation and by ‘dodging taxes’.
Spokespeople for General Mills, Coca-Cola and PepsiCo did not immediately respond to CNBC requests for comment. PepsiCo has in the past denied changing bottle sizes for profit. Coca-Cola has previously explained its smaller bottles as a way to offer lower price points to budget-conscious consumers.
– Bloomberg (paywall) reported that KKR & Co and the US Department of Justice (DoJ) are at odds over a push to hold the firm’s top executives more accountable for disclosures related to takeovers, as US authorities deepen scrutiny of the private equity industry. The fight stems from a federal investigation into whether KKR withheld information in its filings to government agencies about the competitive impact of M&A.
In order to settle the probe, antitrust enforcers want the firm to agree that its co-CEOs could be held personally liable for future lapses, according to people familiar with the matter. KKR has declined that demand and the two sides are at loggerheads over any possible fines and whether a settlement would involve an admission that information was intentionally withheld, the people said.
In a statement, KKR said it takes ‘incredibly seriously’ its obligations to all of its regulators. ‘KKR has been co-operating in good faith and engaging in discussions with the antitrust division of the [DoJ] relating to the accuracy and completeness of some of our Hart-Scott-Rodino filings from 2021 and 2022,’ the firm said.
A spokesperson for the DoJ declined to comment.
– The DoJ made recommendations for Google’s search engine business practices, indicating that it was considering a possible breakup of the company as an antitrust remedy, CNBC reported. The remedies necessary to ‘prevent and restrain monopoly maintenance could include contract requirements and prohibitions, non-discrimination product requirements, data and interoperability requirements and structural requirements,’ the department said in a filing.
The DoJ also said it was ‘considering behavioral and structural remedies that would prevent Google from using products such as Chrome, Play and Android to advantage Google search and Google search-related products and features – including emerging search access points and features, such as [AI] – over rivals or new entrants.’ In addition, the DoJ suggested limiting or prohibiting default agreements and ‘other revenue-sharing arrangements related to search and search-related products.’
The recommendations come after a US judge in August ruled that Google holds a monopoly in the search market. Kent Walker, Google’s president of global affairs, said the company plans to appeal the ruling and highlighted the court’s emphasis on the high quality of Google’s search products, which the judge also noted in his ruling.
The DoJ recommendations are far from decided. In response to the filing, Google’s vice president of regulatory affairs, Lee-Anne Mulholland, called the recommendations ‘radical’.
‘This case is about a set of search distribution contracts,’ Mulholland said in a blog post. ‘Rather than focus on that, the government seems to be pursuing a sweeping agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses and American competitiveness.’
– According to Reuters (paywall), CVS Health, UnitedHealth Group and Cigna have asked US Federal Trade Commission (FTC) chair Lina Khan and commissioners Rebecca Kelly Slaughter and Alvaro Bedoya to disqualify themselves from an FTC lawsuit that has accused the companies of unlawfully inflating insulin prices. The three companies, which own the largest US pharmacy benefit managers – Caremark, Optum and Express Scripts – said Khan, Slaughter and Bedoya had displayed bias against pharmacy benefit managers and prejudged their pricing models.
An FTC spokesperson declined to comment.
– Hedge fund firm DE Shaw revealed that it had built a roughly $1 bn stake in industrial gas company Air Products and Chemicals, the second activist stake at the $71 bn company, according to CNBC. DE Shaw said in letters made public on Thursday that its efforts to engage privately with the company had been largely rebuffed and marked by ‘an apparent lack of urgency’. The investor plans to nominate three directors to the company’s board, according to people familiar with the matter. The potential challenge would come alongside that of another activist fund, Paul Hilal’s Mantle Ridge, which intends to mount a proxy fight for control of the board, the people said.
Air Products declined to comment on either activist engagement.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
