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Voce Capital Addresses Response by Obagi Board of Directors to Its Letter


Voce Capital Management LLC responds today to the statement issued by the Board of Directors of Obagi Medical Products, Inc. (NASDAQ: OMPI) in reaction to Voce's letter dated February 10, 2012.

On February 10, 2012, Voce sent a letter to the Obagi Board of Directors criticizing the Board's recent adoption of a poison pill and demanding immediate action to address corporate governance deficiencies and to evaluate strategic alternatives. Voce's letter stated that it believed Obagi has spurned recent overtures to acquire the Company.

On February 14, 2012, the Obagi Board responded to Voce's letter. The Board's statement notably did not dispute Voce's claims that the Company had recently received and summarily rebuffed offers to acquire Obagi. In addition, the Obagi Board's response states in part:

“Consistent with the Board of Directors' responsibilities, it will review and consider, with the assistance of its financial and legal advisors, any good faith offer for the acquisition of the Company.”

Voce commends Obagi's appointment of strategic advisors, and further welcomes its public commitment that any acquisition offers from this point forward will be reviewed by these independent advisors. Voce believes that this change in Obagi's posture may invite additional acquisition interest.

However, Voce reiterates its view that a crucial element of the Board's strategic review must include thorough solicitation of all potential acquisition interest in the Company. J. Daniel Plants, Voce's Managing Partner, said, “While the commitment Obagi has made in response to our letter is a positive first step, we continue to urge Obagi to authorize its financial advisors to actively encourage acquisition proposals from qualified parties rather than review only inbound interest in a reactive fashion. This is particularly important given the existence of the recently-enacted poison pill and ongoing deficiencies in the Company's governance, both of which may deter potential acquirers and each of which continue to trouble us.”

Mr. Plants concluded: “There is substantial strategic interest in an acquisition of Obagi and broad support for a sale of the Company in both the investment and the analyst community. It behooves the Obagi Board to pursue this potential outcome diligently.”

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