Activist investor Carl Icahn Friday blasted Forest Laboratories Inc. (FRX) for stealthily infusing poison pill provision in its licensing deals, ostensibly to thwart a take-over of the company. Icahn, who owns a 9.92 percent stake in Forest, has been locked in a bitter fight with the drug maker and is vying to instal four of his nominees to the Board.
According to Icahn, Forest in a public filing said it has incorporated a poison-pill provision into a licensing deal entered with Cypress Bioscience in 2004. The provision allows the license to be voided if there is a change of control at Forest not approved by it.
Icahn said the provision will be deleterious to Forest if triggered, and is based on a unilateral decision by the Forest board.
Icahn, after a recent Delaware Court intervention, obtained from Forest information on seven more agreements which he says cannot be shared with other shareholders due to legal restrictions.
Icahn said Forest refuses to disclose whether those agreements too have a poison-pill provision, prompting him to again approach the Court. A Court decision is not expected until the annual meeting of Forest shareholders on August 15.
Icahn also said he has observed significant issues at Forest, including those related to corporate governance.
Icahn has been locked in a prolonged proxy fight with Forest, seeking to gain control by installing four nominees to its Board. Icahn has castigated Forest for its lackluster performance and fears its long term prospects. In the past few months, Icahn has in vain tried to coax Forest CEO Howard Solomon into allowing him board seats, and had directly approached independent directors in this regard.
Additionally, Forest in a filing on Thursday, revealed the implementation of corporate governance measures. Last year, its shareholders sued the Board for breach of duties, asserting, among other things, that Forest failed to shed light on its executive compensation program, included excessive compensation to its CEO Howard Solomon.
FRX is trading at $33.61, up 0.42%, on the NYSE. In the past year, the stock has traded in a range of $28.47 - $36.44.
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