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Mednax CEO, board directors replaced amid settlement with Starboard By Reuters

© Reuters.

By Svea Herbst-Bayliss

BOSTON (Reuters) – Healthcare services company Mednax’s (N:) stock price closed up nearly 4% on Monday after its founder and chief executive and several board members were replaced, half a year after activist investor Starboard Value began pressing for change.

Mark Ordan, who had been CEO at real estate company Quality Care Properties, was tapped to replace Roger Medel, who founded Mednax, valued at $1.5 billion, four decades ago, the company said.

The company also appointed five new directors to replace five who agreed to resign from the 11-member group.

Gavin Molinelli, a partner at Starboard, the hedge fund that owns nearly 10% of Mednax, will become a board observer. He will receive all materials for directors, be permitted to attend and participate but not vote at meetings, as part of the settlement agreed between the hedge fund and the company.

Starboard raised its stake to 9.9% from 9.6%, having purchased more shares two months ago. Starboard paid an average $22.64 per share for its investment. Mednax’s stock price closed at $18.32 on Monday and it has dropped 36.5% since January.

Starboard and Mednax reached a settlement before investors would have voted on the hedge fund’s slate of directors. It originally nominated eight directors, including Jeffrey Smith, who runs Starboard, and Molinelli.

The hedge fund had pushed for Mednax to sell pieces or the entire company and the company said in June that it plans to sell its Mednax Radiology Solutions business.

Starboard has been among the industry’s busiest and most powerful activist investors in winning more board seats than all others, usually through settlements.

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