ConMed Corporation has entered into an agreement with its new 5.9% shareholder, Coppersmith capital Management, that sees key board changes including the departure of company founder Eugene Corasanti. Will this move ultimately satisfy the demands of shareholder Voce Capital Management that the company should be sold?
A few months ago there were reports of shareholder unrest and a general brouhaha at device company ConMed Corporation. We covered the unfolding events back in November, here. The source of the unease at the time was a piece of vitriolic correspondence, made publically available, issued from one of the company’s major shareholders, Voce Capital. The ConMed board was accused of all sorts of things, under the general label of underachievement. Not only that, but they were primarily said to be running the place like a family business, with a culture of, as the claims put it, “nepotism, patronage and dystopian corporate governance that would be corrosive in a closely-held corporation but which is utterly corrupting in a public company”.
Something was always going to happen, because the running of the company by the Corasanti “clan”, despite the Corasanti family not owning much of its stock, was sounding unsustainable, again according to shareholder Voce Capital.
Leap forward a few months to find a press release from Conmed, announcing that it has reached an agreement that paves the way forward. The agreement is with new (and significant) shareholder Coppersmith Capital Management and certain affiliates and sees Eugene Corasanti, the founder of ConMed and hithero Chairman of the Board, stepping down from that position with immediate effect.
Under the terms of the agreement, ConMed will expand the size of the Board from nine to 11 members and appoint Jerome Lande, Managing Partner of Coppersmith Capital Management, and Curt Hartman, former Interim CEO and CFO of Stryker Corporation, to its Board of Directors, effective March 1, 2014.
As part of a board transition Mark Tryniski, an independent member of the Board, has been appointed Chairman of the Board, taking over the role from Eugene Corasanti. A third independent director will be selected by the Company for nomination to the Board of Directors prior to the 2014 Annual Meeting of Shareholders.
So how’s this all working out for Voce Capital? Well, the news earlier in February 2014 was that Voce remained unhappy with the responses it had received from ConMed, including from the aforementioned Mark Tryniski. Voce announced nomination of four new directors to the ConMed board, including its own Daniel Plants plus three industry veterans. So only two weeks ago it was still claiming the company was on the wrong track and should be sold, the finger clearly pointing at “the family” for lack of activity in this regard. Voce was clearly still of the view that ConMed was currently undervalued, as evidenced by the 16% ramp in its share price since the original Voce claims last year.
It remains to be seen whether all of this signals an affirmation of the company’s solidity and future direction or whether Voce Capital will see its original request that ConMed should be sold, being enacted. Notably, CEO Joseph Corasanti remains in place, rather suggesting that the other board changes are more of a sop to shareholders than a sign that the For Sale board is going up tomorrow.
Source: ConMed Corporation, Market Wired