Starboard Value has a $1 billion Pfizer stake, taps former executive for help
People walk past the Pfizer headquarters building in New York City, Jan. 29, 2023.
Kena Betancur | View Press | Corbis News | Getty Images
Activist investor Starboard Value has an estimated $1 billion stake in the pharmaceutical giant. Pfizer and wants to make a turnaround at the struggling company, according to people familiar with the matter.
The activist’s plans could not be read, but Starboard spoke with former Pfizer CEO Ian Read and former chief financial officer Frank D’Amelio, both of whom expressed interest in supporting Starboard’s transition, the people said.
Starboard believes that Pfizer’s current leadership under CEO Albert Bourla has moved away from previously determined spending and investments in new drugs, the people said.
Pfizer’s revenue and free cash flow ballooned during the Covid-19 pandemic, thanks to the company’s fast-track strategy. But its stock has underperformed, trading nearly 30% lower than in 2019. That’s partly due to an expensive acquisition strategy — about $70 billion in M&A as of 2020 — a return that some analysts have questioned.
One such deal was Pfizer’s acquisition of Global Blood Therapeutics. Pfizer pulled the sickle cell disease drug it acquired two years ago for an estimated $5 billion. The company downplayed the financial impact in September, saying the drug Oxbryta generated slightly more than $300 million in revenue last year.
Read was Pfizer’s chief executive from 2010 to 2019 and inherited a company in turmoil. But the shares have more than doubled during his tenure, as management re-established a cost-focused culture that has since departed.
To be sure, the company has taken steps to reduce costs. It began a $4 billion cost-cutting program and then announced a second round of additional cost cuts. However, the number of shareholders is more than 100 billion since the Covid-19 pandemic faded more and more in the rear view mirror.
Starboard is run by Jeff Smith, and has historically focused on the technology sector. It is currently challenging News Corp’s two-tier structure, and in recent months has mounted campaigns at Autodesk, Salesforce and Match Group.
The Wall Street Journal previously reported the Starboard news. A Pfizer spokeswoman declined to comment on “speculation and rumors.”
— CNBC’s Angelica Peebles contributed to this report.
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