D.E. Shaw weighs in on Endo Pharmaceutical's CEO search, investor could seek board representation

By Lisa Kerner

Charlotte, N.C., Feb. 28 - D.E. Shaw Valence Portfolios, LLC urged Endo Pharmaceuticals Holdings Inc. to refrain from hiring a new chief executive officer and instead sell the company to a strategic partner.

Prior to CEO Peter Lankau's resignation, which is effective March 1, Shaw suggested the board hire an investment bank and consider strategic alternatives, a schedule 13D filing with the Securities and Exchange Commission stated.

If a strategic process does not lead to a sale of Endo, Shaw proposed the board hire an experienced CEO with a clear vision for building the company's core pain business and a commitment to cost reduction.

Endo should also undertake a recapitalization through a self-tender in order to repurchase $1.5 billion of the company's outstanding common equity, funded with a mix of existing cash and new debt, Shaw said in a Feb. 27 letter to the company's board.

While Shaw, with a 9.6% stake in Endo, said it is a committed, long-term shareholder, it reserves the right to "take any and all action required to protect the interests of shareholders if our concerns continue to fall on deaf ears." Such action could include seeking board representation, Shaw said in the filing.

Endo is a pharmaceutical company based in Chadds Ford, Pa.

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