Joe Kiani, CEO, Masimo
Scott Mlyn | CNBC
Politan Capital’s Quentin Koffey sent a letter to Masimo CEO Joe Kiani on Wednesday, demanding information about the health-tech company’s proposed spinoff of its consumer business.
Koffey, who won a seat on Masimo’s board last year through a proxy fight, said that, despite his “repeated requests,” he has “not received information as basic and fundamental as even the name of the contemplated JV partner,” weeks after the company first announced it was exploring a split.
Masimo acquired consumer audio company Sound United in 2022 for $1 billion, a deal that led to a 37% drop in its stock price the day of the announcement. The purchase was a catalyst for Politan’s first proxy fight at the company.
Last month, Masimo said it would spin off its consumer business, spurring a rally in the stock.
Koffey said in his letter that Masimo management has asked “that directors sign a non-disclosure agreement” to get access to information around the deal. Koffey, who’s gearing up for a second proxy fight to get full control of Masimo’s board, warned Kiani that if the company delayed or denied his request, he would pursue legal action.
The activist is also seeking information on any financial and leadership opportunities Kiani has been promised at the spinout. The business units Masimo is proposing to spin off are expected to generate between $700 million and $780 million this year, according to the company’s most recent guidance.
Masimo CFO Micah Young said on a call with analysts on Tuesday that executives are working “diligently” and will present their findings on the deal structure and joint venture partner to the full board in the coming months.
A spokesperson for Politan declined to comment beyond the content of the letter. Representatives for Masimo weren’t immediately available for comment.
Politan is Masimo’s second-biggest shareholder, with about 9% ownership, trailing only Fidelity. Kiani is the largest individual investor, with a 7.5% stake in the company.
Masimo shares are up 2.4% this year, closing Wednesday at $120.02. They plummeted 49% in 2022 and another 21% last year.
