Activist investor plans second fight at Masimo, sending shares up 12%


In this article

Joe Kiani, CEO, Masimo
Scott Mlyn | CNBC

Health-tech company Masimo, best known for its successful patent litigation over the Apple Watch, is facing a proxy fight for the second time in two years — from the same activist investor who now sits on the company’s six-person board.

Quentin Koffey’s Politan Capital, a roughly 9% shareholder, announced it would nominate two directors to Masimo’s board, just days after the company announced it would seek to spin off an embattled business unit.

Shares surged 12% on the news in Monday morning trading.

Masimo announced Friday that it would explore a spinoff of its audio unit, which it acquired in 2022 for $1 billion. The acquisition, which frustrated some investors and was seen as unrelated to Masimo’s core health-tech focus, prompted Politan’s first proxy fight at the company.

Now, Politan is seeking two further board seats to ensure that the company follows through on the spinoff, which Politan said was “rushed” to announcement after the activist told the company it would seek additional board seats last week.

Politan’s nominees are former Agilent executive Darlene Solomon and former Stryker CFO Bill Jellison. Solomon oversaw research and development at Agilent, while Jellison helped drive Stryker’s M&A strategy.

If successful, the activist investor would control four of the company’s six board seats.

Politan already won two board seats for Koffey and healthcare executive Michelle Brennan in its previous proxy fight, which was closely followed by investors given the intensity of the fight and unusual tactics by management to stave off Koffey.

Koffey said that he had been initially “optimistic” that Masimo’s board would work with Politan.

“Unfortunately, our efforts were continually rebuffed, as Chairman & CEO Joe Kiani refused to give us basic information, denied us access to management, repeatedly held Board meetings excluding us, and refused to even consider allowing any review of capital allocation or strategy,” Koffey said in a release.

In the previous proxy fight, Kiani showed no desire to settle a fight with the activist fund. Some of Masimo’s maneuvers to try and stave off Politan, like an unprecedented attempt to force activists to detail their other investments and their clients before seeking a board nomination, drew widespread scrutiny.

Politan said in its release that it hoped to avoid another proxy fight.

“Darlene and Bill are indisputably qualified to help the Company and adding them immediately would have the benefit of avoiding a costly and distracting contested election,” Koffey said.

“Members of the Board, including Quentin Koffey, have been a key part of the discussions concerning the separation dating back to January, when Joe Kiani first proposed the idea following a listening tour with shareholders,” a Masimo spokesperson said, noting that two-thirds of the company’s board had joined within the last nine months.

The spokesperson added, “The proposed separation is also consistent with the Company’s prior commitment to reassess the consumer business strategy and structure within three years of the Sound United acquisition.”

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