ConMed’s Shareholder Blast Demands Action

You may well know ConMed as the company that acquired Linvatec back in late 1997. Now it seems sparks are flying at the company as shareholder company Voce has gone public with a damning assessment of ConMed’s management and a call for it to consider strategic alternatives, including a sale of the company.

Background

Voce Capital Management LLC (VCM) is the investment advisor to Voce Catalyst Partners LP (“VCP” and, together with VCM, “Voce”), a shareholder of ConMed Corporation. The company has sent a proper stinger of a letter to ConMed, and gone very public with its content. In a nutshell Voce is calling for an end to the Company’s subjugation by the Corasanti family and is demanding that ConMed pursue strategic alternatives, including a sale of the Company.

So what’s provoked Voce into this action? Well, quite a lot by the sound of it: Voce claims to have spent months performing detailed research into ConMed’s operations and prospects, including multiple meetings with the Company, all of which has left them making some pretty uncomplimentary assertions.

This one paragraph rather sums it up:

“ConMed is a strategically attractive asset trapped within a dysfunctional public vehicle that will never achieve its potential in current form. [S]hareholders have witnessed years of sub-par operational performance, lethargic leadership and missed opportunities. Serial acquisitions have obscured weak organic growth and provided cover for poor execution. As a result, ConMed today is an overly complex, subscale player surrounded by much larger and more successful competitors.”

The rest of the press release and the letter that it attached to it all make for entertaining reading, unless you happen to be a member of the founding Corasanti family at its helm and presiding over what Voce calls a “multi-generational dominion” over ConMed.

And if you’re on the board, you are seemingly equally culpable, according to Voce. You can read the whole thing here, but I couldn’t resist this bit, for its sheer creative venom: The letter says “ConMed suffers from a culture of nepotism, patronage and dystopian corporate governance that would be corrosive in a closely-held corporation but which is utterly corrupting in a public company. And therein lies the wellspring for so many of ConMed’s failures: ConMed is unquestionably family-run – the Corasanti clan members pull all the strings and pamper themselves royally – yet it’s not family-owned, as they hold very little of its stock.

Cutting to the chase, Voce wants ConMed to exploit the fact that it could be attractive to a wide range of strategic acquirors, including large orthopedic players as well as diversified med-tech companies. Based on its analysis, Voce believes ConMed’s shareholders would likely receive a significant premium, potentially in excess of 50% of the stock’s current value, were the Board to pursue a sale of the Company with the assistance of professional advisors.

And it closes with the veiled threat that that should ConMed fail to act, Voce is preserving the full range of options at its disposal to protect shareholder interests.

Ouch. Wonder if ConMed will exercise their right to reply.

Source: Voce Capital Management, LLC., Business Wire