Hedge Fund Eyes Novo nordisk Amid CEO Search
Activist hedge fund Parvus Asset Management is strategically building a stake in Novo Nordisk, teh pharmaceutical giant behind Ozempic, as the company seeks a new chief executive following a important drop in share price. The fund aims to influence the selection process.
activist Investor Takes Interest
London-based Parvus Asset Management, known for its previous campaigns involving Ryanair and Flutter Entertainment, is looking to play a role in the appointment of Novo Nordisk’s next CEO, according to sources familiar with the situation. Novo Nordisk currently employs nearly 500 individuals in Ireland.
Stock Decline and Leadership Change
Novo Nordisk’s shares have experienced a 50% decline over the past year. This downturn is attributed to disappointing clinical trial results for its experimental obesity treatment and lower-than-anticipated sales figures, leading some investors to believe it is losing ground to its U.S. competitor, Eli Lilly, in the competitive weight-loss market.
Last month, Novo Nordisk announced that its current chief executive, Lars Fruergaard Jørgensen, would be stepping down from his position earlier than initially planned. He will remain in his role until a successor is found.While no longer the largest listed company in Europe,Novo Nordisk still boasts a considerable market capitalization of $334 billion.
Stake Size and Foundation Influence
Parvus has not disclosed the exact size of its stake in Novo Nordisk. Under Danish securities regulations, it is indeed not obligated to do so unless its ownership exceeds 5% of the company. Bloomberg data indicates that the activist fund has total shareholdings valued at £5.2 billion.
Novo Nordisk, Parvus, and the Novo Nordisk Foundation, which is the drugmaker’s largest shareholder, have all declined to provide any comments regarding the situation.
The Novo Nordisk Foundation holds the majority of the voting rights within the company,which could make it more challenging for an activist investor to exert influence over its strategic direction. Lars Rebien Sørensen, the chair of the foundation and former head of the drugmaker, has joined the board as an observer during the search for a new CEO.
Sales Forecasts and Competitive Pressures
Novo Nordisk recently lowered its sales and profit projections, citing the rapid proliferation of generic obesity drugs in the U.S. These more affordable alternatives gained temporary approval due to shortages but have since eroded the market share of branded medications. According to a recent report, the global anti-obesity drugs market is projected to reach $61.17 billion by 2030 (Fortune Business Insights).
Activist Tactics and Parvus’s Track Record
Activist investors have a history of applying pressure to companies, even when their shareholdings are relatively small. For example, U.S. activist investors Starboard Value and Irenic Capital engaged in a prolonged campaign against News Corp, the parent company of the Wall Street Journal, despite the Murdoch family’s controlling stake.
Parvus was co-founded in 2004 by Edoardo Mercadante, a former fund manager at Merrill Lynch. The firm gained recognition for successfully opposing William Hill’s proposed merger with Amaya and G4S’s £5.2 billion (€6 billion) takeover bid for ISS, a Danish facilities management company.
In addition to Flutter and Ryanair, Parvus has previously established positions in UniCredit, an italian bank, Accor, a French hotel group, and Ipsen, another Danish pharmaceutical company.
