Koffey Pressures Masimo on Spinoff Details, Threatens Action

Key Takeaway

• Quentin Koffey of Politan Capital demands details on Masimo's consumer business spinoff, threatening a second proxy fight and legal action.
• Koffey seeks information on the spinoff's joint venture partner and any roles for CEO Joe Kiani in the new entity, highlighting governance concerns.
• Masimo's strategic decision to spin off its consumer business follows a $1 billion acquisition of Sound United, aiming to realign focus and unlock shareholder value.

Proxy Battle Intensifies

Quentin Koffey of Politan Capital, having secured a position on Masimo's board following a proxy battle last year, has escalated his demands for detailed information regarding Masimo's proposed spinoff of its consumer business. Despite repeated requests, Koffey reports a lack of fundamental details, including the identity of the potential joint venture partner, weeks after the initial announcement of the spinoff. This move comes as Koffey prepares for a second proxy fight aimed at gaining full control of Masimo's board. He has expressed readiness to pursue legal action should the company delay or deny the requested information.

Financial and Leadership Queries

In addition to seeking basic details about the spinoff, Koffey is inquiring about any financial and leadership roles that Masimo CEO Joe Kiani might be promised in the new spinout entity. This request underscores the broader concerns and interests of Politan Capital, Masimo's second-largest shareholder, in the strategic direction and governance of the company. The business units slated for the spinoff are projected to generate significant revenue, with estimates ranging between $700 million and $780 million for the current year, highlighting the financial stakes involved.

Masimo's Strategic Moves

Masimo's decision to spin off its consumer business follows the acquisition of Sound United in 2022 for $1 billion, a move that initially led to a significant drop in stock price but was later met with a stock rally upon the announcement of the spinoff. Masimo CFO Micah Young has indicated that the company's executives are diligently working on the deal structure and will present their findings to the full board in the coming months. This strategic decision is part of Masimo's broader efforts to realign its business focus and potentially unlock shareholder value.

Management Quotes

• Quentin Koffey, Politan Capital:

  "Despite my repeated requests, I have not received information as basic and fundamental as even the name of the contemplated JV partner."

• Micah Young, CFO of Masimo:

  "Executives are working diligently and will present their findings on the deal structure and joint venture partner to the full board in the coming months."