Starboard Value plans to forge ahead with its boardroom coup attempt at Depomed even though the pain treatment maker backed off a reincorporation plan that had incensed the activist investor.
Depomed said late Thursday that it decided not to pursue a proposed reincorporation to Delaware from California because it would lead to "a costly and distracting proxy contest" while the company tries to grow.
Starboard said Friday the reincorporation plan was designed to entrench the board, and the drugmaker was disingenuous in stating that it withdrew the proposal to avoid a proxy fight.
Starboard Value LP holds a nearly 10 percent stake in Newark, California-based Depomed and has said it wants to replace the drugmaker's board. It has accused current board members of being more concerned with enriching themselves than improving shareholder value.
Depomed has said its board is focused on creating value for all shareholders.
Starboard said Friday it remains convinced that meaningful change is required at Depomed, and it still intends to "vigorously continue" its push to replace the existing board.
"We acquired our position in Depomed because we believe that the company is substantially undervalued and opportunities exist to create significant value for shareholders," Starboard said in a statement.
Earlier this month, Starboard said in a letter to Depomed Inc. executives that it was nominating six people to the drugmaker's board and searching for additional candidates. Aside from the reincorporation plan, Starboard also has criticized Depomed's rejection of a takeover bid by Dublin's Horizon Pharma last year.
Starboard also is seeking to replace the board at Yahoo and succeeded in 2014 at ousting the board at Olive Garden owner Darden Restaurants Inc.
Depomed shares closed at $16.22 on Thursday and have fallen more than 10 percent so far this year despite a jump in price after Starboard announced its plans.