Masimo v. Politan goes into extra innings with two-month shareholder meeting delay, mucho maneuvering

In the history of proxy battles and hostile takeovers, Masimo v. Politan may be one for the business and law school case histories. The latest moves by health tech monitoring (and sound) company Masimo are to sue–both metaphorically for extra time and literally in a Federal court.

• Masimo postponed on Tuesday 16 July their shareholder meeting, originally scheduled for next week–Thursday 25 July–to Thursday 19 September. The revised proxy statement will be filed with the Securities and Exchange Commission (SEC). This not only allows shareholders additional time to review materials but also, as requested by Politan Capital Management, a later ‘record date’  (deadline for share ownership) of 12 August. 
• The downside of the postponement is that any shareholders who have already voted their proxies must vote again. Downside #2:  in this Editor’s view, conceding this allows Politan to accumulate additional shares beyond their current 9%.
• Another reason for the delay: in a California Federal court, Masimo has filed for an injunction that seeks to force Politan Capital to correct “material misstatements and omissions” in its proxy materials.
• Masimo also alleges in the complaint that Quentin Koffey, Politan’s chief investment officer and the company’s representative on Masimo’s board of directors, has assisted Politan’s counsel in litigation against Masimo.

The fight on the Masimo board of directors for two open seats pits the Masimo slate of CEO Joe Kiani and outside candidate Christopher Chavez, against Politan’s Darlene Solomon and William Jellison. Politan already holds two seats and with a win of two additional seats will control the company. Two outside proxy advisors, ISS and Glass Lewis have recommended that Masimo shareholders support both Politan nominees. Glass Lewis in particular accuses Masimo and Kiani in a form of proxy manipulation called ’empty voting’ by a 9.9% shareholder named RTW, a $5.9 billion fund described by Joe Kiani on the RTW website as a decades-long ‘trusted partner.’

Countering this are multiple conditional resignations from managers to leadership that would be effective if Politan controls the company, which would constitute a pyrrhic victory.

The bone of contention started in 2022 with the tussle over Masimo’s $1 billion purchase of Sound United’s consumer audio business, which made their share price crater. Masimo announced last week [TTA 10 July] plans to sell a substantial portion of that consumer audio and healthcare business to a to-date unnamed investor. MedTech Dive, Strata-gee.com, Masimo release

A few days earlier, Strata-gee summarized Masimo’s preliminary financials for Q2 2024 as strong for the Healthcare division with revenues of $344 million, up 22% at $63 million or 22% versus $281 million in Q2 2023. But the Sound United unit sank these good results with a 13% decline in revenues to $152 million–a decline that has been fairly consistent. Masimo needs to find another investor or sell off Sound United.

Stay tuned!