Given Imaging Ltd. (GIVN) should buy back $50 million of shares and make another effort to find a buyer, according to an investor who said the medical-device maker has been mismanaged.
Given Imaging failed to execute its business strategy, causing management to lose credibility and hurting the stock price, Discovery Group, which owns about 4 percent of Given Imaging, said in a letter to the board made public today. A spokeswoman for the Yokneam, Israel-based company, which has a market value of about $611 million, didn’t immediately reply to a telephone request for comment.
“We no longer believe Given Imaging can attain its true intrinsic value in the public markets,” Mark Buckley, a partner with Chicago-based Discovery, wrote in the letter. “By returning excess cash to shareholders and conducting a full auction process to sell the company, the board will remove the execution risk that exists under the current management regime while providing shareholders with an attractive return.”
Given Imaging, which makes a capsule-sized camera to examine the colon, hired advisers from Barclays Plc last year as it considered a possible sale or merger. The company in January ended the effort to find a buyer. Given Imaging suffered a setback last year when it said it wouldn’t submit its PillCam Colon 2 to the U.S. Food and Drug Administration for general screening use, and would instead limit its product to patients who are unable to undergo or complete colonoscopies.
“We have held discussions with potential strategic buyers,” Discovery said. “Consistent with our observations, these companies recognize the same missed opportunities and failed management. Most importantly, the strategic buyers also recognize the compelling opportunity which still exists and are eager to participate in a formal and legitimate sale process.”
Israeli newspaper Calcalist reported last year that Fujinon, a unit of Fujifilm Holdings Corp. (4901), was in talks to buy Given Imaging at a valuation of $750 million.
Given Imaging rose 3.2 percent to $19.85 at the close in New York. The company may fetch $26 to $30 a share in a sale, Discovery said.
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