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Two of Pfizer’s former executives have pulled out of hedge fund Starboard Value’s campaign to shake up the pharmaceutical company after previously lobbying for the activist investor’s turnaround plan.
Former chief executive and chair Ian Read and former finance chief Frank D’Amelio have decided not to be involved in Starboard’s campaign targeting the drugmaker, they said in a statement on Wednesday.
“We are fully supportive of Pfizer Chairman and CEO Albert Bourla, senior management and the board, and we are confident that over time they will deliver shareholder value,” said the former executives in a statement issued by Pfizer’s longtime adviser, investment bank Guggenheim Partners.
The reversal marks a twist in an unusual corporate clash. While activists occasionally team up with major shareholders, such as when Nelson Peltz joined former Marvel executive Isaac Perlmutter in a campaign for change at Disney, it is rare for longtime company executives to support hostile shareholders.
Activist investor Starboard Value has built a $1bn stake in the pharmaceutical company, the Financial Times previously reported. The hedge fund has not laid out its proposal for the drugmaker publicly, but people familiar with Starboard’s thinking said it believed Pfizer had been poorly managed and misspent the windfall from its blockbuster Covid-19 vaccine on a costly $70bn acquisition spree.
Starboard enlisted help from the two longtime former executives, who spoke to several members of Pfizer’s board of directors over the weekend on the hedge fund’s plans to shake up the company.
The move came as a surprise to executives and advisers in the industry. Read personally appointed Bourla as chief executive in 2019, while D’Amelio served under Bourla as his chief financial officer.
Pfizer has lost about half of its market value compared with its pandemic peak, when sales of its Covid vaccine drove a surge in revenues. The company’s market capitalisation was $171bn as of Wednesday.
Pfizer’s share price had been flat over the past year. But news about Starboard building a stake in Pfizer drove the drugmaker’s share price 5 per cent higher over the past week.
Representatives from the hedge fund planned to meet Bourla and Pfizer’s lead independent director, Adobe chief Shantanu Narayen, next week, the FT previously reported.
Starboard and Pfizer did not immediately respond to a request for comment.