After the market closed on Wednesday and just a few days before the July 15th shareholder meeting it was speculated that QVT Financial will be siding with activist shareholder First Manhattan in its bid to replace the entire Board at Vivus (VVUS) and bring on a new CEO.
First Manhattan holds 9.9% of Vivus' shares and QVT holds an 8.3% stake. Combined, these two firms account for 18.2% of all shares. First Manhattan is the company's largest shareholder and QVT is the third largest.
In recent days the battle between the current Board of Directors and First Manhattan has reached a fever pitch with both sides trading barbs and extolling the virtues that their stance is the best course for the future of the company. Last week, proxy firm ISS recommended that shareholders vote for just three of the First Manhattan nominees, while Egan Jones recommended the full slate. In contrast, Vivus has claimed that proxy firm Glass Lewis.
In what is perhaps a show of force Vivus has been active on the Press Release wires announcing a partnership for erectile dysfunction drug Spedra that puts millions of dollars into the Vivus coffers, as well as some positive news on the insurance front for coverage of its anti-obesity drug Qsymia.
Clearly, this all important vote may come down to the wire. I can imagine that over the next two trading days, and perhaps over the weekend, that conference rooms will be full, phone lines will be burning up, and executives on both sides will be burning the midnight oil in an 11th hour attempt to either keep or gain control.
Investors that want the current board and management to stay in place should vote the GOLD card, while those siding with First Manhattan should vote the WHITE card.
In recent days Vivus has seen its stock price move up sharply, which may be perceived as support for current management. There is a lot at stake here and for the small retail investor it may seem like you have no say. You do. In this case the vote seems to be very tight. That means that every vote counts. Over the coming days expect volatility in this equity. It is not for the faint of heart. The future direction of this company will be decided not by the performance of the pipeline, but rather the results of this shareholder vote.