Believes Slate Possesses Necessary
Experience in Capital Allocation, Corporate Governance, Pet
Healthcare, Supply Chain Management and Succession Planning
Contends the Upcoming Annual Meeting is the
Ideal Moment to Introduce Truly Independent Directors and Start a
Boardroom Dialogue Around a Properly Timed CEO Change in
2025
Reminds Shareholders That Elanco’s
Leadership Has Failed to Deliver Value and Meet its Own Promises
Over Every Long-Term Horizon
Urges Shareholders to
Review Presentation Regarding the Case for Shareholder-Driven
Change Atop Elanco
Ancora Holdings Group, LLC (together with its affiliates,
“Ancora” or “we”), which owns approximately 3% of the outstanding
common stock of Elanco Animal Health Incorporated (NYSE: ELAN)
(“Elanco” or the “Company”), today issued the below statement
regarding its nomination of four highly qualified, independent
candidates for election to the Company’s Board of Directors (the
“Board”) at the 2024 Annual Meeting of Shareholders (the “Annual
Meeting”). Ancora has also released a presentation, entitled
“Overview: The Case for Change at Elanco’s
2024 Annual Meeting,” which can be viewed and downloaded
here.
“Ancora has amassed a roughly $250 million stake in Elanco
because we believe it is a high-potential business with an
admirable mission, strong market opportunity and significant runway
for sustained value creation. 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.
It is important to stress that we provided Elanco with a detailed
analysis of its issues pertaining to corporate governance, finance,
operations and product development, while also privately proposing
a settlement framework that accounted for a shareholder-driven
refreshment of the Board and an orderly succession process in 2025
for long-serving CEO Jeff Simmons. Unfortunately, this framework
seemed to be of no interest to the Board, which refused to engage
in substantive principal-to-principal negotiations and a real
two-way discussion regarding changes that would benefit the
Company. We can only assume that the Board feels insulated because
of its classified structure and shareholder-unfriendly policies,
despite overseeing a more than 50% decline in value since
inception.
We believe Elanco’s Board should be operating with humility and
an open mind after presiding over anemic margins, ballooning debt,
poor capital allocation and shoddy forecasting. All of this has
translated to negative total shareholder
returns over every relevant long-term period, including
since inflection points such as the Company’s 2018 initial public
offering, 2020 acquisition of Bayer Animal Health and 2021
announcement of structural changes to simplify the organization.
This is why when Elanco once again claims to be at an ‘inflection
point’ due to reactionary governance changes and recent stock price
movement, we are compelled to point out that the Company is really
just being picked up off the mat by Ancora. Elanco’s stock price
began rising late last year as we increased our investment and the
market became aware of potential shareholder-driven changes at the
Company.
We anticipate that the Board and Mr. Simmons will try to avoid
accountability by suggesting that an orderly management change will
disrupt the Company’s pipeline. Shareholders, however, should
consider a few key points before buying into this. First, a planned
departure in 2025 positions Mr. Simmons to remain engaged during
upcoming product launches, even as the Board commits to planning
for a transition. Second, shareholders are actually de-risked if
Mr. Simmons – who has not overseen any value creation at Elanco –
is gradually less involved in product strategy and pipeline
oversight. Lastly, team members such as EVPs Ellen de Brabander,
Ph.D. and Tim Bettington are really the key leaders of upcoming
launches.
As evidenced by our emphasis on the next generation and
willingness to have a principal on the Board, we look forward to
being a long-term shareholder of Elanco. We have identified areas
in which prior campaigns for change at the Company may have fallen
short. Our slate possesses sorely needed experience in capital
allocation, corporate governance, pet healthcare, supply chain
management and succession planning. Each of our director candidates
looks forward to engaging with Elanco shareholders about their
constructive and practical ideas for igniting a turnaround at the
Company and identifying its next generation of management. If
elected by shareholders, rest assured our nominees intend to put
this contest in the rearview mirror and support the type of
collegial boardroom dialogue that is necessary to unlocking the
full potential of Elanco.”
DIRECTOR CANDIDATE BIOS
Kathy Turner
Ms. Turner is a successful pet healthcare executive with
significant global experience in both the animal health and broader
healthcare industries.
- Previously held senior leadership positions in international
commercial operations at IDEXX Laboratories (NASDAQ: IDXX), a
global pet healthcare innovation company, from 2014 to 2023,
including most recently serving as Global Chief Marketing
Officer.
- Previously held various leadership roles during her nearly
30-year tenure at Abbott Laboratories (NYSE: ABT), a multinational
medical devices and healthcare company where she most recently led
commercial operations for Europe.
- Previously served on the Executive Leadership Team of Health
for Animals, an organization that focuses on animal health products
and animal well-being, and the Nutrition and Technology Innovation
Advisory Board of Kiasco Animal Health, an animal health event
series that connects innovation and investments.
- Currently on the board of directors of Veterinarians Without
Borders, an organization that promotes animal well-being, human
health and economic development domestically and
internationally.
Craig Wallace
Mr. Wallace is an experienced animal health and veterinary
executive, most recently leading one of the largest animal health
companies in the world.
- Former Chief Executive Officer (North America/Pacific) of Ceva
Santé Animale, the fifth largest animal health company
worldwide.
- Previously held leadership roles at Trupanion, Inc. (NASDAQ:
TRUP), a pet insurance provider, and Fort Dodge Animal Health, a
global manufacturer of animal health products for the livestock,
companion animal, equine, swine and poultry industries.
- Currently runs an animal health and human healthcare investment
firm and serves on the boards of directors of companies including
1C, a pet retail distributor, and KeraVet Bio, a veterinary wound
care company.
- Previously served on the boards of directors of organizations
including the National Commission on Veterinary Economic Issues and
the Kansas City Animal Health Corridor Advisory Board.
James Chadwick
Mr. Chadwick, a representative of the nominating shareholder,
possesses additive experience in capital allocation, finance and
strategic restructurings, and executive succession
processes.
- Current President of Ancora Alternatives LLC, where he manages
approximately $1.5 billion in capital for partners that include
pensions, foundations, and institutional and individual
clients.
- Seasoned investor with a track record of helping companies
implement positive and long-lasting governance enhancements,
including de-classifications, voting standard changes and director
refreshments.
- Former Senior Analyst at Relational Investors LLC, a pioneer in
constructivist investing.
- Previously served on the boards of directors of companies that
include Stewart Information Services Corporation (NYSE: STC), Hill
International, Inc. (f/k/a NYSE: HIL) and Riverview Bancorp, Inc.
(NASDAQ: RVSB).
Andrew Clarke
Mr. Clarke is a proven corporate leader and supply chain
expert with experience in areas that include capital allocation,
cost management initiatives, corporate governance and executive
succession planning.
- Current Chairman of Global Critical Logistics, a provider of
freight forwarding and logistics.
- Former Chief Financial Officer of C.H. Robinson Worldwide, Inc.
(NASDAQ: CHRW), a global logistics company.
- Former Chief Financial Officer of Forward Air Corporation
(NASDAQ: FWRD), an asset-light freight and logistics company, and
former President and Chief Executive Officer of Panther Expedited
Services (n/k/a Panther Premium Logistics).
- Currently serves on the board of directors of Element Fleet
Management Corp. (TSX: EFN), where he serves on the Audit Committee
and Credit and Risk Committee.
- Previously served on the boards of directors of companies that
include Logistics Innovation Technologies Corp. (NASDAQ: LITT),
Oregon Tool (f/k/a Blount International, NYSE: BLT) and Pacer
International, Inc. (f/k/a NASDAQ: PACR).
***
About Ancora
Founded in 2003, Ancora Holdings Group, LLC offers integrated
investment advisory, wealth management, retirement plan services
and insurance solutions to individuals and institutions across the
United States. The firm is a long-term supporter of union labor and
has a history of working with union groups and public pension plans
to deliver long-term value. Ancora’s comprehensive service offering
is complemented by a dedicated team that has the breadth of
expertise and operational structure of a global institution, with
the responsiveness and flexibility of a boutique firm. For more
information about Ancora, please visit https://ancora.net.
Advisors
Wilson Sonsini Goodrich & Rosati is serving as legal advisor
to Ancora, with Longacre Square Partners LLC serving as
communications and strategy advisor and Saratoga Proxy Consulting,
LLC serving as proxy solicitor.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Ancora Alternatives LLC (“Ancora Alternatives”) and the other
Participants (as defined below) intend to file a preliminary proxy
statement and accompanying BLUE universal proxy card with the
Securities and Exchange Commission to be used to solicit proxies
for, among other matters, the election of its slate of director
nominees at the 2024 annual meeting of shareholders (the “2024
Annual Meeting”) of Elanco Animal Health Incorporated, an Indiana
corporation (the “Corporation”).
The participants in the proxy solicitation are currently
anticipated to be Ancora Catalyst Institutional, LP (“Ancora
Catalyst Institutional”), Ancora Catalyst, LP (“Ancora Catalyst”),
Ancora Merlin Institutional, LP, (“Ancora Merlin Institutional”),
Ancora Merlin, LP (“Ancora Merlin”), Ancora Bellator Fund, LP
(“Ancora Bellator”), Ancora Impact Fund LP Series Z (“Ancora
Impact” and together with Ancora Catalyst Institutional, Ancora
Merlin Institutional, Ancora Merlin, Ancora Catalyst, Ancora
Bellator, Ancora Impact, collectively, the “Ancora Funds”), Ancora
Alternatives, Ancora Holdings Group, LLC (“Ancora Holdings”) and
Frederick DiSanto (collectively, the “Ancora Parties”); and James
Chadwick, Andrew C. Clarke, Kathy V. Turner and Craig S. Wallace
(the “Ancora Nominees” and, collectively with the Ancora Parties,
the “Participants”).
Ancora Catalyst Institutional beneficially owns directly
2,230,542 shares of the Corporation’s common stock, no par value
(the “Common Stock”). Ancora Catalyst beneficially owns directly
231,370 shares of Common Stock. Ancora Merlin Institutional
beneficially owns directly 2,231,680 shares of Common Stock. Ancora
Merlin beneficially owns directly 209,163 shares of Common Stock.
Ancora Bellator beneficially owns directly 582,569 shares of Common
Stock. Ancora Impact beneficially owns directly 4,757,777 shares of
Common Stock. Ancora Alternatives SMAs collectively beneficially
owns directly 2,664,550 shares of Common Stock (consisting of
shares of Common Stock held in certain separately managed accounts,
collectively, the “Ancora Alternatives SMAs”). Ancora Alternatives,
as the general partner and investment manager of each of the Ancora
Funds, may be deemed to beneficially own the 12,907,651 shares of
Common Stock beneficially owned in the aggregate by the Ancora
Funds and held in the Ancora Alternatives SMAs (including the
2,328,300 shares of Common Stock underlying 22,883 American call
options and 400 American style put options). Ancora Holdings, as
the sole member of Ancora Alternatives, may be deemed to
beneficially own the 12,907,651 shares of Common Stock beneficially
owned in the aggregate by the Ancora Funds and held in the Ancora
Alternatives SMAs (including the 2,328,300 shares of Common Stock
underlying 22,883 American call options and 400 American style put
options). Frederick DiSanto, as the Chairman and Chief Executive
Officer of Ancora Holdings, may be deemed to beneficially own the
12,907,651 shares of Common Stock beneficially owned in the
aggregate by the Ancora Funds and held in the Ancora Alternatives
SMAs (including the 2,328,300 shares of Common Stock underlying
22,883 American call options and 400 American style put options).
The Ancora Parties beneficially own 12,907,651 shares of Common
Stock in the aggregate (including the 2,328,300 shares of Common
Stock underlying 22,883 American call options and 400 American
style put options). None of the Ancora Nominees beneficially own
any shares of Common Stock. All of the foregoing information is as
of the date hereof unless otherwise disclosed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240229862234/en/
Saratoga Proxy Consulting LLC John Ferguson / Joseph Mills,
212-257-1311 info@saratogaproxy.com Longacre Square Partners LLC
Charlotte Kiaie / Joe Germani, 646-386-0091
AncoraELAN@longacresquare.com
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