NEW YORK (GenomeWeb) – Investment firm Lone Star Value Management has withdrawn its proxy contest to replace two members of Enzo Biochem's board of directors after Institutional Shareholder Services backed Enzo's candidates.
Last week Lone Star issued an open letter to all Enzo Biochem shareholders, urging them to vote for two Lone Star nominees to Enzo's board of directors. The investment firm said that it had "serious concerns" with Enzo's "poor performance and disregard for shareholder rights."
Enzo characterized the proxy fight as "misguided and disingenuous," adding that the two Lone Star nominees are "not qualified to serve by any measure or standard, lacking even a rudimentary understanding of both our business and our industry, unprepared and unable to provide any true plan for shareholder value, and conflicted and lack any independence."
Enzo's board candidates, Dov Perlysky and Gregory Bortz, were backed last week by advisory firm Glass Lewis, which recommended that Enzo shareholders vote for the incumbent board members. That endorsement was repeated by ISS this week, which said that Lone Star has "not made a compelling case that change is necessary."
It added, "it is helpful to recall that the turnaround of [the] business itself appears, at least over the past two years, to have taken root, and an upward trend in key metrics has, as of the most recent fiscal quarter, finally brought the company back into the positive financial performance which has been, as the dissidents noted, sorely lacking for a decade."
Following ISS's opinion, Lone Star issued a statement to Enzo shareholders saying that it has decided to withdraw its proxy contest, though it took issue with ISS's analysis and determination, which it called flawed. In particular, Lone Star said that ISS made "a poor choice of peer group," which led to its "unjustifiable conclusion that despite underperforming all peer groups and indices for almost any normal measurable period, Enzo does not need change."
Enzo President Barry Weiner welcomed ISS's determination that shareholders should back the firm's candidates, saying, "These recommendations represent a validation of Enzo's comprehensive business strategy and the positive trajectory the company is on."
Shares of Enzo were up nearly 2 percent at $4.58 in Tuesday afternoon trade on the New York Stock Exchange.