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Carl Icahn Eyes Next Target with 13% Stake in Hologic

November 21, 2013 | About:
Holly LaFon

Holly LaFon

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After shaking up Dell (DELL) and Apple (AAPL) this year, billionaire investor Carl Icahn has set his sights on his next target: Hologic Inc. (HOLX). Icahn reported today in a 13D activist filing with the SEC that he has taken a 12.63% stake in the company, equal to 34,154,879 shares, costing in aggregate $285.4 million.

Icahn said he acquired the position because he believed the stock was undervalued. He also intends to initiate discussions with the management about ways to enhance shareholder value, and possibly seek shareholder board seats.

Hologic, a women’s healthcare company focused on breast health, diagnostics, GYN surgical and skeletal system and headquartered in Massachusetts, forecast a 1% to 3% decline in revenue for fiscal year 2014 due to decreased sales of several of its products. Shares dropped more than 10% within a day of the announcement.

For its fiscal fourth quarter 2013 the company on Nov. 11 reported revenues increased 5.7% from the previous year to $622.1 million, driven by a 14.4% increase in its diagnostics business. It suffered a quarter net loss of $1.1 billion, or $4.11 per diluted share, increased from a $77.8 million net loss, or $0.29 per diluted share, a year prior.

On the same day, the company announced board authorization of a $250 million, three-year stock repurchase program.

The following shows Hologic’s share buyback history:



Hologic’s balance sheet shows $958 million in cash – its highest-ever level – with $4.35 billion in long-term debt. The company pays no dividend, and has seen its gross margin decline at an average rate per year of 1.9%.



The company’s President and CEO Jack Cumming commented on the fourth quarter financial results: "We have made significant progress in recent months in reviewing the strategy, leadership and cost structure of each of our businesses, all with a focus on making changes to the organization that will enable us to leverage our strong product platforms going forward. We expect fiscal 2014 to be a transitional year for the Company and we remain confident the changes we are making to enhance the organization, combined with improving trends across our portfolio of market-leading products, will drive stronger financial performance in fiscal 2015 and beyond."

In response to Icahn’s stake disclosure, Hologic has adopted a shareholder rights plan aimed to ensure shareholders receive fair and equal treatment and to prevent any individual from gaining control of the company without providing them adequate compensation.

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