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SurModics, Ramius proxy fight is downright tame, if it is a fight

|Includes:SurModics, Inc. (SRDX), ZRAN

As proxy fights go, the battle for SurModics Inc. (NASDAQ:SRDX), based in Eden Prairie, is downright tame — for now.

Last week, Ramius LLC, the alternative investment firm of Cowen & Co. that recently purchased a 12 percent stake in SurModics, named its three candidates to the board of directors, according to documents filed with the Securities and Exchange Commission.

Ramius asked investors to elect Dr. David Dantzker, a partner with venture capital firm Wheatley Partners, Jeffrey Meckler, managing director of biotech consulting firm Andrea Group, and Ramius partner managing director Jeffrey Smith.

While Ramius strongly criticized SurModics’ performance of late, the firm told shareholders it only seeks to “help,” not usurp the board.

“We are not seeking control of the Board of Directors,” the SEC documents say. “However, we hope that this election contest will send a strong message to the remaining incumbent directors that shareholders are not satisfied with the Company’s poor operational and stock performance, and that operational and strategic changes are required now.

“We believe management and the Board need assistance in determining the right strategic direction for the Company and the right path forward to improve shareholder value,” according to the documents. “Our nominees have the necessary experience and desire to work constructively with management and the Board to address these issues.”

As for Surmodics, the company released a statement Monday that said little other than it will offer a response once it files its official proxy statement.

“SurModics’ Board of Directors and management team are committed to acting in the best interest of the Company and all SurModics shareholders,” the company’s statement said. “We have had an open dialogue with Ramius, as we do with all SurModics shareholders, since they first invested in our Company. SurModics’ Board is actively engaged in the strategy of the Company and is committed to building value for all shareholders.”

Given the civil tone of Ramius and SurModics’ statements, and that SurModics did not outright reject Ramius’ nominees (which often happens in these cases), I think this is less a proxy battle than a negotiation between SurModics and its largest investor.

So expect to see some sort of deal worked out before SurModics holds its annual meeting.

Now, contrast SurModics with that of Zoran Corp. (NASDAQ:ZRAN), a maker of digital audio and video technology based in Sunnyvale, California. Earlier this month, Ramius said it would try to oust Zoran’s entire board, including the chairman.

“We do not believe that the current Board has served the best interests of the Company’s stockholders, and we do not have confidence in the ability of the current Board to improve the Company’s operating performance and enhance stockholder value,” Ramius said.

In response, Zoran urged shareholders to withhold judgment until it can file an official, unfriendly response. But Zoran essentially called Ramius greedy.

“Zoran noted that Ramius is attempting to take control of Zoran’s Board and the Company without paying a control premium to other Zoran stockholders,” the company said in a press release. “Zoran also noted that Ramius is attempting to obtain board representation far in excess of its ownership interest in Zoran (approximately 8 percent of the Company’s outstanding shares).

“Zoran expects to file consent revocation materials with the SEC including its response to several inaccuracies and misrepresentations that are contained in Ramius’s consent solicitation materials about the markets in which Zoran competes and Zoran’s current position and future outlook, among others,” the release said.

Now THAT’S a proxy fight!

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Stocks: SRDX, ZRAN