Activist investor Irenic Capital Management has reportedly taken a more than 3% stake in Integer Holdings Corporation (NYSE:ITGR). It is pressing the medical-device outsourcing company to refresh its board and evaluate strategic alternatives, including a potential sale.
Irenic, now among Integer's largest shareholders, sent a private letter to the company's board earlier this week outlining its concerns and recommendations.
The Wall Street Journal noted that the investor believes the company's shares are undervalued and that changes at the board level could help unlock value.
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Lack Of Peers
A central part of Irenic's argument is that Integer lacks clear, publicly traded pure-play peers, which has limited investor understanding and analyst coverage.
As a result, the activist contends the market has struggled to assess the company's earnings power and long-term prospects properly.
Irenic also believes Integer may be more appealing as a private company.
Due to confidentiality obligations with customers, it is harder for public-market investors to underwrite its pipeline fully, the Wall Street Journal reported, citing people familiar with the matter.
Integer partners with medical-device companies to design, develop, and manufacture critical components across several end markets, including cardiac rhythm management, neuromodulation, and cardio and vascular applications.
The business plays a key role in supplying complex components to device makers, but much of that work remains opaque to investors, the report added.
Integer's shares have declined around 44% year to date, as per data from Benzinga Pro.
Irenic has told the board it believes there would be meaningful takeover interest from potential buyers, including private-equity firms, at a substantial premium to the current share price. The broader context may support that view.
The Wall Street Journal added that the medical-device contract development and manufacturing sector has seen robust deal activity in recent years, with transactions often commanding higher earnings and revenue multiples than those implied by Integer's current valuation.
Recent Deals
Earlier in December, Teleflex Incorporated (NYSE:TFX) agreed to sell its Acute Care, Interventional Urology, and OEM businesses to two buyers, Intersurgical Ltd with respect to Acute Care and Interventional Urology, and Montagu and Kohlberg with respect to OEM, for $2.03 billion.
In November, the United States District Court for the Northern District of Illinois denied a request by the U.S. Federal Trade Commission and certain state regulators to issue a preliminary injunction that would have prevented the proposed acquisition of Surmodics Inc. (NASDAQ:SRDX) by GTCR.
In May 2024, private equity firm GTCR agreed to acquire medical device coating company Surmodics for approximately $627 million, or $43 per share.
Integer had reported third-quarter adjusted earnings of $1.79 per share, beating the consensus of $1.68, with sales up 8% to $467.69 million, beating the consensus of $466.45 million.
ITGR Price Action: Integer Holdings shares were up 5.68% at $78.34 at the time of publication on Thursday, according to Benzinga Pro data.
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