Paul Singer’s Elliott Investment Management has taken a substantial stake in kidney care giant Fresenius, reports Bloomberg.
Why is this important: Elliott’s position increases the likelihood of a breakup of the Germany-based conglomerate, “whose structure has long been considered too complex and inefficient by some shareholders,” writes Bloomberg.
Offer details: The size of Elliott’s unreported stake has not yet exceeded the 3% disclosure threshold under German securities rules, according to Bloomberg.
- Shares of Fresenius – which had fallen around 40% year-to-date before the news – jumped around 13% in Wednesday trading.
Catch up fast: The increasingly large conglomerate Fresenius has struggled in recent years, losing longtime CEO Stephan Sturm in August after cost pressures and COVID-related impacts weighed on profits.
- Over the past five years, the company’s shares have steadily declined, falling from a high of $57 in 2018 to a low of $14 on Thursday.
- Michael Sen, who has led the Fresenius Kabi unit since April 2021 and has been involved in the company’s restructuring in previous roles at Siemens and E.ON, stepped in to succeed Sturm this month.
- The company comprises four units: its intravenous drug division, Kabi; Helios chain of hospitals; its stake in the Fresenius Medical Care dialysis unit; and its stake in health center operator Vamad.
Rollback: Last March, Fresenius Health Partners (the US unit of the parent company), InterWell Health and Cricket Health joined forces to create a massive kidney care business valued at $2.4 billion.
Between the lines: Elliott, an activist fund known for its sharp cost-cutting tactics, has a history at other public giants including athenahealth, Thyssenkrupp AG and software conglomerate SAP SE.
Yes, but: The company may face difficulty rolling out its usual playbook at Fresenius, according to Bloomberg, due to special rights granted to the foundation of former entrepreneur Else Kroener, who led the company for about four decades. until his death in 1988.
- The foundation has resisted Fresenius’ structural overhauls in the past, Bloomberg reported.