Ancora nominates four director candidates, urges CEO succession at Elanco

Ancora Holdings, which owns approximately 3% of the outstanding common stock of Elanco, issued the below statement regarding its nomination of four independent candidates for election to the company’s board of directors at the 2024 annual meeting of shareholders. Ancora has also released a presentation, entitled “Overview: The Case for Change at Elanco’s 2024 Annual Meeting.” “Ancora has amassed a roughly $250 million stake in Elanco because we believe it is a high-potential business with an admirable mission, strong market opportunity and significant runway for sustained value creation. Based on extensive analysis and good faith engagement with Elanco, it appears that the biggest barriers to success are the Company’s insular Board and unaccountable CEO. It is important to stress that we provided Elanco with a detailed analysis of its issues pertaining to corporate governance, finance, operations and product development, while also privately proposing a settlement framework that accounted for a shareholder-driven refreshment of the Board and an orderly succession process in 2025 for long-serving CEO Jeff Simmons. Unfortunately, this framework seemed to be of no interest to the Board, which refused to engage in substantive principal-to-principal negotiations and a real two-way discussion regarding changes that would benefit the Company. We can only assume that the Board feels insulated because of its classified structure and shareholder-unfriendly policies, despite overseeing a more than 50% decline in value since inception. We believe Elanco’s Board should be operating with humility and an open mind after presiding over anemic margins, ballooning debt, poor capital allocation and shoddy forecasting. All of this has translated to negative total shareholder returns over every relevant long-term period, including since inflection points such as the Company’s 2018 initial public offering, 2020 acquisition of Bayer Animal Health and 2021 announcement of structural changes to simplify the organization. This is why when Elanco once again claims to be at an ‘inflection point’ due to reactionary governance changes and recent stock price movement, we are compelled to point out that the Company is really just being picked up off the mat by Ancora. Elanco’s stock price began rising late last year as we increased our investment and the market became aware of potential shareholder-driven changes at the Company. We anticipate that the Board and Mr. Simmons will try to avoid accountability by suggesting that an orderly management change will disrupt the Company’s pipeline. Shareholders, however, should consider a few key points before buying into this. First, a planned departure in 2025 positions Mr. Simmons to remain engaged during upcoming product launches, even as the Board commits to planning for a transition. Second, shareholders are actually de-risked if Mr. Simmons – who has not overseen any value creation at Elanco – is gradually less involved in product strategy and pipeline oversight. Lastly, team members such as EVPs Ellen de Brabander, Ph.D. and Tim Bettington are really the key leaders of upcoming launches. As evidenced by our emphasis on the next generation and willingness to have a principal on the Board, we look forward to being a long-term shareholder of Elanco. We have identified areas in which prior campaigns for change at the Company may have fallen short. Our slate possesses sorely needed experience in capital allocation, corporate governance, pet healthcare, supply chain management and succession planning. Each of our director candidates looks forward to engaging with Elanco shareholders about their constructive and practical ideas for igniting a turnaround at the Company and identifying its next generation of management. If elected by shareholders, rest assured our nominees intend to put this contest in the rearview mirror and support the type of collegial boardroom dialogue that is necessary to unlocking the full potential of Elanco.”