In a letter to shareholders, Ramius partner Jeffrey Smith on Monday asked for shareholder support in calling a special general meeting to elect the hedge fund's board candidates: J. Michael Egan, Peter Feld, Steven Lee and Charles Orsatti. Smith said the current board has failed "spectacularly" by buying Blackstone Medical in 2006 for $333 million and new independent board members are needed in order to resolve the company's troubles. As part of Ramius' solution for Orthofix, Smith is asking the company to sell Blackstone, and use the proceeds to pay down debt, which ballooned after the Blackstone purchase.
Ramius owns about 5.1% of Orthofix, giving it considerable clout. And because Orthofix is incorporated in the Dutch Antilles, only 10% of shareholders are needed to call a special general meeting. However, most of Orthofix's major shareholders of record are mutual funds and other passive investors. Nonetheless, it shouldn't be too difficult to reach the threshold given the firm is already halfway there on its own.
Smith believes Orthofix shares could jump to $25 each if the company follows Ramius' suggestions. Shares of Orthofix closed Monday at $16.20, which is way off from its 52-week high of $58.67, but far better than its 52-week low of $8.65 a share.
Ramius first threatened action against the company in early December via an SEC filing. - Matthew Wurtzel
After threatening to seek the removal of four board members at orthopedic products company Orthofix International NV, activist investor Ramius Capital finally stopped growling and is attempting to take a bite out of the board.
