Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Engine Capital has revealed a 3% stake in Avantor (NYSE:AVTR) and is pushing for strategic changes to boost shareholder value, according to a letter sent to the company’s board.
The activist investor believes Avantor has strategic value of $17 to $19 per share in a potential sale scenario.
Alternatively, Engine Capital outlined recommendations that could drive the share price to between $22 and $26 by the end of 2027.
These recommendations include refreshing the board, evaluating the company’s portfolio, strengthening execution, instilling cost discipline, and aligning executive compensation with shareholder value creation.
Engine Capital suggested Avantor should consider divesting non-core assets to accelerate debt reduction and generate cash for stock repurchases.
Potential divestiture candidates include distribution assets in smaller geographies where the Laboratory Solutions segment lacks scale, the Ritter business, and NuSil, which Engine believes could sell for as much as 20 times earnings.
The activist investor also recommended that the board evaluate whether selling the Laboratory Solutions segment to become a pure-play bioprocessing company would create value.
"Finally, it is worth recognizing that the life sciences industry is consolidating. Customers and suppliers are becoming bigger, and it may be beneficial for Avantor to ultimately be part of a larger entity," Engine stated in its letter.
The firm indicated it would be satisfied with either a sale of the company or implementation of its strategic recommendations, urging the board to pursue the best risk-adjusted outcome for shareholders.
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