By John Russell
Indiana Business Journal
Elanco Animal Health Inc. said Monday it has reached an agreement with an activist investment firm that has been calling for a shakeup of the board and the dismissal of CEO Jeffrey Simmons.
The Greenfield-based maker of animal vaccines, antibiotics and other health products said that as part of the agreement with Ancora Holding Inc., it will appoint two new independent directors supported by the investment firm to its board.
The move will expand Elanco’s board to 14 members but will allow the company to avoid a messy proxy fight this spring over the future of the company and its leadership.
The new board members are Kathy Turner and Craig Wallace, two of the four candidates that Ancora proposed earlier this year in a head-on challenge to Elanco, which it had accused of underperforming its peers and destroying billions of dollars’ worth of shareholder value.
Ancora owns about 3% of Elanco’s outstanding shares, and in recent months has been strongly pushing for an overhaul of the company. Simmons has said repeatedly, though, that the company is on a growth path with blockbuster drugs about to hit the market.
“We are pleased to have reached an agreement with Ancora on a constructive path forward, and we look forward to working with Kathy and Craig toward our common goal of progressing our robust and innovative pipeline and driving near- and long-term sustainable growth and value for our shareholders.” Elanco chairman R. David Hoover said in written remarks.
Frederick DiSanto, chairman and CEO of Ancora, called the agreement the result of a “recent engagement” with Elanco, in a statement issued by Elanco. The Cleveland-based investment firm did not post its own statement on its website Monday morning.
Elanco said it has entered into a cooperation agreement with Ancora and its affiliates that contains customary standstill, voting and other provisions. It said the agreement will be filed with the U.S. Securities and Exchange Commission.
Simmons said he welcomed the two new directors.
“We are pleased to welcome Kathy and Craig, both accomplished animal health industry executives, to the Elanco Board,” Simmons said in written remarks. “We are making meaningful progress as we continue to execute our innovation, portfolio and productivity strategy, and we are confident that Kathy and Craig will be valuable additions to the Board.”
Ancora was seeking to replace four of Elanco’s directors with its own nominees at the company’s upcoming annual meeting. The investor group was also pushing for the retirement of Simmons next year. Simmons, 56, has led the company since it went public more than five years ago and for a decade before that when it was part of Indianapolis-based drugmaker Eli Lilly and Co.
Ancora had said Elanco just has not delivered on its promises and has watched its stock sink 57% from its all-time high in 2021.
“Based on extensive analysis and good faith engagement with Elanco, it appears that the biggest barriers to success are the company’s insular board and unaccountable CEO,” the investor group said in a statement just last month, when it took the fight public.
But Simmons had said Elanco has a promising pipeline and is poised to deliver several potential blockbusters to the market. He said earlier this year that Elanco’s best strategy was to “stay the course,” not to undergo a radical shakeup.
“We’ve got the right strategy; we’ve got the right board, the right leadership team; and we are executing,” Simmons told IBJ last month. “And the vision for me has never been clearer. We are building a global animal health company to reach the world’s animals.”
Turner has held senior leadership positions at IDEXX Laboratories, a publicly traded pet health-care company, from 2014 to 2023, including most recently as chief marketing officer, and served in various roles in nearly 30 years at Abbott Laboratories, a publicly traded medical devices and healthcare company, most recently leading commercial operations for Europe. She is currently on the Board of Veterinarians Without Borders, an organization that promotes animal well-being, human health and economic development domestically and internationally.
Wallace is president of C.S. Wallace Investments & Strategy LLC, an animal health and human health-care investment firm. He previously served as CEO of Ceva Sante Animale, the firth largest animal health company worldwide.
Turner and Wallace will join the board’s renamed Finance, Strategy and Oversight Committee.
Shares of Elanco edged up 12 cents in pre-trading activity Monday morning to $16.40.
