By Svea Herbst-Bayliss
NEW YORK (Reuters) -Investor Browning West wants Cooper Cos to add four newcomers to its board to improve the medical device maker’s operations and signaled it is ready to run a proxy contest if the company should balk, according to a letter sent to the company.
After several meetings with management this year, the hedge fund is increasing pressure by proposing three industry executives and one of its partners to join Cooper’s board to correct the current board’s perceived lack of expertise in vision care, manufacturing, and medical devices, two sources told Reuters before Browning West made the letter public on Wednesday morning.
“Urgent change at the board level is required to refocus and optimize Cooper’s business, restore shareholder confidence, and help Cooper realize its significant long-term potential,” Browning West’s co-founders Usman Nabi and Peter Lee and firm partner Faraz Athar wrote in the letter to the board.
By implementing their changes, Browning West – which owns roughly 4% of Cooper – believes the contact lens maker, which is trading around $72 per share to give a market value of around $14 billion, could double its stock price in three to four years, the letter said.
The stock has traded roughly 28% lower in the last 12 months. Browning West’s letter blames this decline on Cooper’s lack of strategic focus, misaligned compensation and inadequate board oversight.
A representative for the company did not immediately respond to a request for comment.
Cooper makes contact lenses and vision-care products through its CooperVision segment and provides products and services for women’s health and fertility through CooperSurgical. It is the largest contact lens business by number of wearers.
SECOND ACTIVIST TO EMERGE
Browning West is the second activist investor to publicly pressure Cooper for changes in the last four weeks.
Jana Partners is urging Cooper to conduct a comprehensive strategic review, which could include a sale, improve capital allocation and make operational improvements.
Browning West is taking a different approach, hoping to instigate change from internal modifications.
While advocating an initially measured approach, Browning West also made clear in its letter that it will not tolerate changes being made to the board or management without consultation with it first.
Browning West has a history of replacing board members both with and without proxy fights. Last year, it scored a notable victory at Gildan Activewear, when the Canadian activewear maker replaced its entire board with the firm’s eight director candidates.
As a first step at Cooper, Browning West wants the addition of industry executives Walter Rosebrough, Joseph Papa and Andrew Pawson as director candidates. Athar, the Browning West partner, is the fourth director candidate and brings an investor perspective to the boardroom, the letter said.
Rosebrough was CEO at medical devices business Steris and Browning West would like him to be the company’s next chair and replace Robert Weiss, Cooper’s chair and former CEO.
Papa is a former CEO of Bausch + Lomb, a former chair and CEO of Bausch Health and a former chair and CEO of Perrigo. And Pawson was president and general manager of the Global Vision Care Franchise at Alcon, the world’s biggest independent vision-care company.
The letter added there is “no strategic or financial logic to operating CooperVision and CooperSurgical under the same corporate structure,” hinting that they too would be open to exploring strategic alternatives, including a possible sale.
(Reporting by Svea Herbst-Bayliss; Editing by David French and Lisa Shumaker)
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