Why Share Count Matters: LabCorp in the Crosshairs
Feb 17, 2021 16:19:23 GMT
sshl and jakemn like this
Post by dnr08 on Feb 17, 2021 16:19:23 GMT
If you think that Jana would take a similar tack with Opko, perhaps because of the inherent value in GeneDx, think again. With a mere 97 million shares outstanding on a $14 billion revenue base, LabCorp is a much tastier target for an investor like Jana. Vanguard owns 10.7% of LH, and Blackrock 8%; those are the only > 5% owners. Jana clearly looked at comps (DGX and OPK) while doing DD on LH. OPK had to emerge as even more undervalued than LH. But they had to look at the cap structure, and ownership, and passed.
Activist Investor Jana Partners Builds New Stake in Labcorp (1)
2021-02-17 14:22:58.374 GMT
By Scott Deveau
(Bloomberg) -- Jana Partners has built a new position in
Laboratory Corp. of America Holdings, the latest investment in
the health-care space for the activist investor.
The New York-based hedge fund said in a regulatory filing
Tuesday it owned a stake in the clinical laboratory company
valued at about $192 million. Labcorp was Jana’s fourth-largest
investment at the end of December, according to data compiled by
Bloomberg.
It is unclear whether Jana will seek changes at the
company, and a representative for the firm declined to comment.A
representative for Labcorp wasn’t immediately available for
comment.
Labcorp’s shares have climbed nearly 24% over the past
year, giving the company a market value of $23 billion.
The arrival by an activist at Labcorp may prompt the
company to launch a strategic review to potentially sell or spin
off its Covance clinical research business, said Brian
Tanquilut, an analyst with Jefferies Financial Group Inc., in a
note to clients Wednesday.
Investor frustration has been high because the stock
continues to trade at a steep discount with no credit being
given for owning its higher-growth clinical research assets, he
said. Tanquilut estimates Labcorp’s Covance business alone could
be worth $285 a share, or 21% higher than where Labcorp trades,
based on the multiples that similar businesses trade at. That
suggests there is the potential for meaningful value creation in
a sale or spin, he said.
Jana has a history of investing in the health-care space,
disclosing a stake late last year in Encompass Health Corp.
Encompass subsequently announced it was exploring strategic
alternatives for its home health and hospice business, including
a potential sale or spinoff of the business.
Jana also ran a proxy contest at Team Health Holdings Inc.
in 2016, which resulted in a settlement that saw two of its
representatives join the board. Blackstone Group Inc. later
agreed to acquire Team Health later that year in a deal valued
at $3.2 billion.
In addition to Labcorp, Jana disclosed new positions in
W.R. Grace & Co. and Tegna Inc., which currently faces a second
proxy fight with one of its investors, Standard General. It
exited its stake in Callaway Golf Co. and Brink’s Co. during the
fourth quarter as well.
Activist Investor Jana Partners Builds New Stake in Labcorp (1)
2021-02-17 14:22:58.374 GMT
By Scott Deveau
(Bloomberg) -- Jana Partners has built a new position in
Laboratory Corp. of America Holdings, the latest investment in
the health-care space for the activist investor.
The New York-based hedge fund said in a regulatory filing
Tuesday it owned a stake in the clinical laboratory company
valued at about $192 million. Labcorp was Jana’s fourth-largest
investment at the end of December, according to data compiled by
Bloomberg.
It is unclear whether Jana will seek changes at the
company, and a representative for the firm declined to comment.A
representative for Labcorp wasn’t immediately available for
comment.
Labcorp’s shares have climbed nearly 24% over the past
year, giving the company a market value of $23 billion.
The arrival by an activist at Labcorp may prompt the
company to launch a strategic review to potentially sell or spin
off its Covance clinical research business, said Brian
Tanquilut, an analyst with Jefferies Financial Group Inc., in a
note to clients Wednesday.
Investor frustration has been high because the stock
continues to trade at a steep discount with no credit being
given for owning its higher-growth clinical research assets, he
said. Tanquilut estimates Labcorp’s Covance business alone could
be worth $285 a share, or 21% higher than where Labcorp trades,
based on the multiples that similar businesses trade at. That
suggests there is the potential for meaningful value creation in
a sale or spin, he said.
Jana has a history of investing in the health-care space,
disclosing a stake late last year in Encompass Health Corp.
Encompass subsequently announced it was exploring strategic
alternatives for its home health and hospice business, including
a potential sale or spinoff of the business.
Jana also ran a proxy contest at Team Health Holdings Inc.
in 2016, which resulted in a settlement that saw two of its
representatives join the board. Blackstone Group Inc. later
agreed to acquire Team Health later that year in a deal valued
at $3.2 billion.
In addition to Labcorp, Jana disclosed new positions in
W.R. Grace & Co. and Tegna Inc., which currently faces a second
proxy fight with one of its investors, Standard General. It
exited its stake in Callaway Golf Co. and Brink’s Co. during the
fourth quarter as well.