The proxy fight between Masimo (Nasdaq: MASI) and Politan Capital Management continues to heat up ahead of the digital health pioneer’s July 25 shareholders meeting.
In an SEC filing last week, Masimo said COO Bilal Muhsin has informed the board’s lead independent director that he will resign if CEO Joe Kiani is removed. “I strongly disagree with the false accusations made by Politan in its recent fight letter and deck and have no intention of remaining with the company if Quentin Koffey and Politan take control of it,” Muhsin said in the filing.
Kiani’s board seat is on the line in the vote. Company management is also running Christopher Chavez — a 30-year medtech veteran who previously held CEO roles at Trivascular and Advanced Neuromodulation Systems Inc. (ANSI) — for an independent director slot. Politan is meanwhile running former Stryker CFO Bill Jellison and former Agilent Technologies SVP and Chief Technology Officer Darlene Solomon for the spots.
Politan’s decision to seek Kiani’s ouster comes after it won a heated fight for two seats last year.
Under pressure from Politan, the maker of pulse oximeters, wearable health trackers, and other health monitoring devices has been looking at options to split off its consumer business, undoing a two-year-old $1 billion acquisition of Sound United and its high-end audio and home theater systems.
Masimo said in the same June 26 SEC filing announcing Muhsin’s plans that it remains in discussions with an undisclosed potential joint venture partner that would acquire a majority stake in the consumer business.
The latest proxy fight has seen both sides making a host of public accusations against each other.
For example, Politan, which says it has spent $600 million on a 9% stake in Masimo, says the company has been open to sitting Jellison and Solomon on its board — but only if Politan agrees to a set of demands that the activist investor says it will not approve. The demands include allowing Kiani to leave to become CEO of the new stand-alone consumer business, taking IP and top employees with him along with a $400 payout and more, according to a June 26 letter that Politan sent to Masimo shareholders.
“Fundamentally, what this upcoming vote is about is simple: fixing the prolonged and deliberate refusal by Masimo to permit independent oversight. However, in light of the Board’s unprecedented actions, this vote will also have broader reaching implications in establishing what conduct institutional shareholders will tolerate,” Politan officials said in the letter.
Responding to another accusation — that its board candidate Chavez is unable to operate as an independent director — Masimo said in a news release today: “What we find most disappointing, and troubling, is that Politan’s central argument to cede control of Masimo to Politan is the ‘refusal by Masimo to permit independent oversight.’ It appears to us that Politan is repeating a false narrative over and over in the hopes that stockholders will believe it to be true.”
(Also today, Masimo announced adding a new sleep analysis feature for its W1 advanced health tracking wearable.)
Masimo has more arguments for its side on protectmasimosfuture.com, while Politan is making its case at www.advancemasimo.com.
Despite the tough proxy fight, BTIG analysts Marie Thibault and Sam Eiber say: “We reiterate our MASI Buy thesis, which has focused on a return to consistent quarterly results, cash generation, and improving margins.”
