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Key Takeaways

• Charles River Laboratories made changes in its board and announced a strategic review as it faced pressure from Elliott Investment Management.

• The medical testing firm will add four new board members, and four current members won't run for reelection.

• Elliott, the company's biggest shareholder, called the steps being taken "the right ones" to boost the value of Charles River.

Charles River Laboratories (CRL) shares soared 16% to lead S&P 500 gainers Wednesday morning as the medical testing company announced a shakeup of its board and launched a strategic review of its operations after being pressured by activist investor Elliott Investment Management.

Charles River's board agreed to bring on four new directors, as four current members won't seek reelection. Following the changes, which will come at the May 20 annual meeting, the company will have 11 directors, nine of whom independent.

The board also authorized "a comprehensive strategic review and evaluation of Charles River’s business and prospects, including an examination of various alternatives to enhance long-term stockholder value."

In addition, Charles River said that it has signed a cooperation deal with Elliott, its largest shareholder, in which Elliott "has agreed to customary standstill, voting, confidentiality, and other provisions."

'Substantial Opportunity' Exists to Unlock Value, Elliott Partner Says

Partner Marc Steinberg noted that Elliott believes Charles River's "current value is significantly disconnected from its underlying potential," and a "substantial opportunity" exists to unlock that value. Steinberg explained that these new moves by the company "are the right ones."

Shares of Charles River Laboratories sank to a more than six-year low last month, and even with today's gains they remain down more than 25% year-to-date.

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