March 29, 2019 / 10:50 AM / in 21 days

Magellan Health bows to Starboard pressure, names four to board

(Reuters) - Magellan Health Inc said on Friday it reached an agreement with hedge fund Starboard Value LP to add four new independent directors to the board, including the former chief executive officer of the U.S. healthcare plan and pharmacy benefits manager.

Starboard, which owns 9.8 percent stake in the company, has agreed to withdraw its slate of alternate directors and vote in favor of all of the board nominees, the company said in a statement.

Activist investor Starboard last month sought to put six directors on the board and sent a letter to shareholders arguing that management should be looking at a number of options, including a sale.

The settlement ends what may have been a costly and time-consuming battle over control of the Scottsdale, Arizona-based company.

Reuters reported on Thursday that Magellan was nearing an agreement with Starboard to expand the size of its board and add a representative from the hedge fund as a director.

The new independent directors include Starboard’s nominees, its head of research Peter Feld, attorney Leslie Norwalk, turnaround expert Guy Sansone and Steven Shulman, former CEO of Magellan, bringing the total board to 10.

As part of the agreement, Magellan will form a strategic committee of independent directors. Feld, Shulman and two standing Magellan directors - former portfolio manager Michael Diament and Scott Mackenzie, CEO of a healthcare documentation company - will serve on the committee.

Last month, Reuters reported that Magellan, which has a market capitalization of about $1.6 billion, would explore a sale after facing pressure from Starboard.

Reporting by Saumya Sibi Joseph in Bengaluru and Jessica DiNapoli in New York; Editing by Shinjini Ganguli and Jeffrey Benkoe

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