Exclusive - Activist investor Voce pushes ConMed to sell

Reuters

By Nadia Damouni

NEW YORK (Reuters) - Activist investor Voce Capital Management LLC is pushing ConMed Corp (NSQ:CNMD) to pursue a sale, saying it believes the surgical-device maker could attract buyout interest from at least a dozen industry peers, according to a letter seen by Reuters on Sunday.

Voce Capital, which holds less than 1 percent in ConMed, is expected to send a 13-page letter to the company's board as soon as Monday, saying it believed several suitors had approached ConMed about a buyout but had been turned away. It was not clear when the approaches were made or who made them.

The San Francisco-based investor said in the letter that it believes companies, including Johnson & Johnson (NYS:JNJ), Zimmer Holdings Inc (NYS:ZMH), Stryker Corp (NYS:SYK), Boston Scientific Corp (NYS:BSX) and Danaher Corp (NYS:DHR), could be interested.

The letter, signed by Voce Capital managing partner and former JPMorgan Chase & Co (NYS:JPM) investment banker Daniel Plants, also raises issue with the company's operational performance and management, which has been led by members of the Corasanti family over the past four decades.

ConMed CEO Joseph Corasanti serves on the company's board with his father, Eugene Corasanti, who founded the company in 1973. The elder Corasanti currently holds the titles of chairman of the board and vice chairman. Collectively, the two own 0.7 percent of outstanding common stock, according to Thomson Reuters data.

A representative for the Utica, New York-based ConMed, which has a market capitalization of $1 billion (628 million pounds), was not immediately available for comment late on Sunday.

The letter from Voce Capital, a relative newcomer in the world of activist investing, would add to ConMed's problems. The company's revenue and earnings have fallen this year and it cut its earnings guidance for fiscal year 2013, as U.S. hospitals and public healthcare systems in other countries face budgetary constraints and delay equipment purchases.

In July, during the company's conference call after earnings, one of ConMed's largest investors Heartland Advisors Inc asked, "But I just wonder why it's not in the shareholder's best interest to maybe, hire a bank and see whether a strategic might surface."

Voce Capital and ConMed management, including Joseph Corasanti and CFO Rob Shallish, have held several meetings and calls, starting in June and running through October, a person familiar with the situation said. But they have not managed to assuage the investor's concerns.

Voce Capital has made 50 investments since its inception. The ConMed investment will mark its fourth public shareholder campaign. It is not clear yet if the investment firm will run a proxy contest against ConMed.

Last year, the investor announced its intention to replace the entire board of Obagi Medical Products Inc (OMPI.O). Soon after that Obagi said it would be sold to Valeant Pharmaceuticals International Inc (TOR:VRX) for about $344 million.

(Editing by Paritosh Bansal and Christopher Cushing)

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