Pfizer ducks challenge to its board amid battle with Starboard

(Bloomberg) — Pfizer Inc. got a reprieve in its battle with activist investor Starboard Value LP — at least for now, according to people familiar with the matter.

Starboard did not nominate any directors to Pfizer’s board ahead of the Jan. 25 deadline for the company’s April annual meeting, people familiar with the matter said.

The news eased some pressure on Pfizer Chief Executive Albert Bourla, who insisted the company was on track to reverse its steep post-pandemic decline. The New York drugmaker’s shares have fallen more than 50% so far in 2021 as demand for its coronavirus drugs dried up and a series of costly acquisitions stoked investor skepticism.

A Pfizer spokesman declined to comment. Starboard did not immediately respond to a request for comment.

However, this is not necessarily the end. Starboard, which acquired a stake in Pfizer late last year for about $1 billion, could still propose replacing the company’s board of directors in 2026 if the two sides fail to reach a settlement before then.

Starboard CEO Jeff Smith said Pfizer management has lost at least $20 billion in market value through misleading acquisitions and investments in a lackluster drug pipeline. Smith said in October that replacing Bourla “probably makes sense.”

Smith’s aggressive challenge got off to a chaotic start, with two former Pfizer executives initially supporting Starboard’s effort but later changing their stance in late-night statements and pledging support for Bourla. Smith later accused Pfizer of forcing the two former executives to change their tune by threatening them with legal action. Bourla told Bloomberg in October that Pfizer had done nothing “inappropriate” in responding to challenges from activists.

Bourla has since downplayed Starboard’s criticism, telling reporters at the J.P. Morgan Healthcare Conference earlier this month that the activist was only calling for changes “on the fringes” of the drugmaker’s business and was not creating a “radical situation.” “.

“They’re in stock,” Bourla said. “I thank them for their trust and we move forward.”

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