Plot thickens: SurModics names CEO, puts pharma unit up for sale

I guess SurModics Inc. just responded.

Just a day after the company based in Eden Prairie said it would formally respond to Ramius LLC’s efforts to name three people to its board of directors, SurModics announced late Tuesday it had named a new CEO and would explore a sale of its pharmaceuticals business.

SurModics said it appointed Gary R. Maharaj as president and CEO six months after pushing out Bruce Barclay in June. Maharaj was previously CEO of Arizant Inc., which 3M Cos. recently acquired for $810 million.

SurModics also said it hired Minneapolis investment bank Piper Jaffray & Co. to explore “strategic alternatives,” including a sale, for its pharmaceutical unit. Such a sale would be a tacit admission that its decision to open a $41 million pharmaceutical plant in Alabama just this year was a (very expensive) mistake.

“Our Pharmaceuticals business has compelling long-term growth and profitability prospects and operates a world-class facility for the manufacture of both clinical and commercial pharmaceutical products,” Chairman Robert C. Buhrmaster said in a statement.

“However, our Board determined that the best course of action is to explore alternatives for our Pharmaceuticals business so that we can dedicate more resources and efforts to pursuing growth opportunities and investments in our Medical Device and In Vitro Diagnostics businesses,” he said.

The real question is how Ramius, the alternative investment arm of Cowen & Co., will react. The firm, which became SurModics’ largest investor by recently purchasing a 12 percent stake in the company, asked shareholders last week to approve its three nominees to SurModics’ board of directors.

While critical of SurModics’ performance, Ramius said it wanted to help, not replace, the board.

There really are only two possibilities here. One: Ramius already knew about the new CEO and possible pharma sale and approved it. Or two: SurModics wanted to preempt Ramius by taking action to appease shareholders.

I initially leaned toward to Option One. But now, I’m not sure. Wouldn’t Ramius want a say in such major decisions? Otherwise, why nominate three people to the board?

Ramius partner managing director Jeffrey Smith did not immediately respond to an e-mail seeking comment.

The plot thickens.

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