SurModics Appoints 2 New Directors, Ends Dispute
SurModics, Inc., said Wednesday that it has agreed to appoint two board members nominated by its largest shareholder-thus ending a dispute dating back to November.
Two months ago, Ramius, LLC, and its affiliates-which own about 12 percent of SurModics' shares-submitted a letter to the Eden Prairie-based company announcing that it was nominating three new board candidates due to the company's “long-term underperformance.” Ramius said that shareholders were “not satisfied with the company's poor operational and stock performance” and that “operational and strategic changes are required now.”
The two new directors, who will join the board immediately, are Jeffrey C. Smith, partner managing director and chief investment officer at Ramius Value and Opportunity Master Fund, and David Dantzker, partner of New York-based venture capital firm Wheatley Partners, LP; both are among the three individuals previously nominated by Ramius.
In connection with the agreement reached with SurModics, Ramius has agreed to vote its shares in favor of each of the board's nominees-which now include its two candidates-at the company's annual meeting on February 7.
Robert C. Buhrmaster, chairman of SurModics' board, said that the new arrangement was “in the best interest of the company and all SurModics shareholders.”
“Through this agreement with our largest shareholder, we will be able to dedicate our full efforts and resources to enhancing value for all SurModics shareholders,” Buhrmaster said in a statement. “Our board and management team are committed to continuing to work hard on behalf of all SurModics shareholders and look forward to benefiting from the collective experience of our two new directors to build an even stronger future for SurModics.”
Two current SurModics directors-John A. Meslow and Kenneth H. Keller-will vacate their seats at the February 7 meeting. After that, SurModics' board will be comprised of 10 directors-President and CEO Gary R. Marahaj and nine independent members.
SurModics has had a tough year in 2010. For its fiscal year that ended on September 30, the company reported $69.9 million in revenue-down 42.5 percent from $121.5 million in the prior fiscal year.
The company reported a fourth-quarter loss of $21.7 million, or $1.25 per share, a substantial departure from the $2.7 million, or 16-cents-per-share, profit that the company posted in the same period last year.
In March, SurModics' CEO of five years, Bruce J. Barclay, resigned from the company in order to take the helm at Mountain View, California-based Hansen Medical, Inc. In October, the company announced plans to reduce its workforce by 13 percent and also said it would reorganize into three business units-medical device, pharmaceuticals, and in vitro diagnostics.
However, the company in December said that it would begin exploring “strategic alternatives” for its pharmaceutical business, and on Thursday SurModics said that its board had formed a committee-which includes the two newest members-to oversee that “ongoing exploration.”
Ramius issued a statement on Wednesday, saying that it supports efforts to explore strategic alternatives, “including a potential sale,” for the company's pharmaceutical business.
SurModics, founded in 1979, provides drug-delivery and surface-modification technologies and in vitro diagnostic test kits to the health care industry.