Scotia doubts Obrem demands for MDS shakeup

July 3rd, 2008
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Obrem Capital Management, a New York based activist hedge fund, has been trying to get MDS Inc. to sell or spin-off one or more business units. After disclosing a 5.1% stake in the company this past April, Obrem has put pressure on MDS increase shareholder value through changing its capital structure, buying back shares, and selling off assets. On June 26, Obrem Capital Management sent a letter suggesting that MDS sell off its Nordion unit to raise capital for a stock buyback. However, Scotia Capital analyst John Maletic doubts that Obrem will be able to get changes accomplished at MDS without support from more shareholders and management. The largest MDS shareholder is ValueAct Capital, an activist investor with 19% stake. But with a seat on the board already, it is uncertain whether ValueAct will be open to Obrem Capital Management's efforts.


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