Here’s a bold statement: the future of Cooper Companies (COO) could be on the brink of a dramatic shift, and it’s all thanks to Jana Partners, an activist investor with a knack for shaking things up. But here’s where it gets controversial—Jana’s push to break up this global medical device giant might just be the catalyst the company needs to unlock its true potential. Let’s dive into why this move could change everything for Cooper’s stock outlook and, more importantly, why it’s sparking heated debates among investors.
Cooper Companies, headquartered in Pleasanton, California, operates through two distinct business units: CooperVision and CooperSurgical. CooperVision dominates the contact lens market, offering popular products like MyDay daily disposables and Biofinity lenses. Meanwhile, CooperSurgical focuses on fertility and women’s health, providing everything from IVF services to medical devices and cryostorage solutions. With a market value of $14.41 billion, Cooper is no small player, but Jana Partners believes it’s not living up to its potential.
And this is the part most people miss—Jana, founded by Barry Rosenstein in 2001, has a proven track record of strategic activism. Their approach, once dubbed ‘V cubed’ (Value, Votes, Variety), has evolved into what we now call the ‘three Ss’: Stock price, Strategic activism, and Star advisors. This shift reflects their focus on driving long-term value through bold moves, like spinning off underperforming units or aligning with top industry talent. Now, they’ve set their sights on Cooper, and their plan is as ambitious as it is divisive.
On October 20, Jana announced its stake in Cooper and its intention to explore strategic alternatives, including a potential merger of CooperVision with competitors like Bausch + Lomb. Why? Because Cooper’s decision to divert cash from its high-performing contact lens business to the less profitable CooperSurgical segment has led to declining returns on capital. Here’s the kicker—CooperSurgical, despite receiving over $3 billion in investments since 2017, operates at lower margins than it did before. This raises questions about the company’s strategic focus, especially since CEO Albert White, a former CooperSurgical leader, took the helm during this expansion. Is Cooper spreading itself too thin?
The timing couldn’t be more critical. CooperVision’s rollout of its new MyDay Energys lens has been delayed, missing market expectations. Meanwhile, CooperSurgical’s IVF business has slowed, partly due to political uncertainty around potential insurance coverage for fertility treatments. These challenges led to a 12.85% drop in Cooper’s share price after its third-quarter earnings call, leaving the stock trading at a steep discount to its historical average.
Jana’s solution? Split the company. By separating CooperVision and CooperSurgical, Jana argues, each business could thrive independently. A merger of CooperVision with a peer like Bausch + Lomb could generate $300 million to $500 million in synergies—a massive boost for a business with $850 million in EBITDA. But here’s the controversial part—while antitrust concerns typically loom over such deals, this merger might actually enhance competition, as the combined market share would still trail behind Johnson & Johnson’s 37% lead. Even Bausch + Lomb’s CEO, Brent Saunders, has publicly endorsed the idea, calling it a win for competition.
What about CooperSurgical? Private equity firms like Blackstone and TPG might show interest, but Jana suggests an internal turnaround could be more lucrative. By focusing on high-margin IVF services, shedding non-core assets, and bringing in new leadership, CooperSurgical could become a standalone success story.
Here’s the million-dollar question—will Cooper’s management agree? If they resist, Jana’s campaign could shift from a strategic breakup to a leadership overhaul, potentially replacing the CEO with someone deeply rooted in the contact lens industry. While Jana isn’t openly calling for a change, the pressure is on. The argument is compelling, but will it be enough to convince management?
This isn’t just a story about corporate restructuring—it’s a debate about vision, strategy, and leadership. What do you think? Is Jana’s plan the right move, or is Cooper better off as a unified entity? Let us know in the comments, and stay tuned as this high-stakes drama unfolds.
