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Hologic, Fending off Icahn, Adopts Poison Pill to Deflect Takeover

Billionaire financier and activist investor Carl Icahn has found a new target: Bedford, MA-based Hologic (NASDAQ: HOLX).

Icahn today reported a 12.63 percent stake in Hologic, intending to shake things up at the women’s health products and diagnostics company. Hologic immediately responded by adopting a one-year shareholder rights plan to protect itself from a hostile takeover.

“The board believes the rights plan will preserve its ability to implement its strategic initiatives and create long-term value for all stockholders,” Hologic said in a statement.

Icahn, meanwhile, is clearly looking to make some changes at Hologic. He deemed the shares “undervalued” in a Form 13D filed with the Securities and Exchange Commission, said that he intends to talk with Hologic management, and may push for a board seat. Icahn has gotten into public proxy battles in biotech before, agitating for change on the boards of Biogen Idec (NASDAQ: BIIB), Forest Laboratories (NYSE: FRX), Genzyme (before it was acquired by Sanofi), and Amylin Pharmaceuticals (before Bristol-Myers Squibb and AstraZeneca bought it out).

Icahn is jumping in to the stock during a tumultuous year for Hologic, which has switched CEOs, reported net losses, and slashed its financial forecast after its $3.7 billion acquisition of San Diego, CA-based Gen-Probe in 2012. Hologic’s projected 2014 revenue numbers missed Wall Street expectations, triggering a series of downgrades from analysts and a more than 10 percent stock sell-off on Nov. 12. The company has a history of making big acquisitions like Gen-Probe, Cytyc ($6.2 billion), and Third Wave Technologies ($580 million), but at a high cost that has ruffled investors.

“[Hologic’s] management team has been often criticized for destroying shareholder value through overpaying for large, transformative acquisitions such as Cytyc in 2007, and, to a lesser extent, Gen-Probe in 2012,” said RBC Capital Markets analyst Glenn Novarro in a note to clients today.

Still, even with Icahn’s involvement, he doesn’t think an easy turnaround can be achieved without a buyout.

“While a new management team would be a positive for the stock, we believe the fundamental outlook is still challenged and there are no quick fixes to enhance shareholder value,” he wrote.

Shares of Hologic surged about 3 percent in early trading following Icahn’s announcement.