Dissident Investor Lays Out Plan to ICN Shareholders
ICN Pharmaceuticals Inc.’s dissident investor Special Situations Partners Inc. met with other shareholders in New York to detail its opposition to ICN’s reorganization plan and push for an auction of the company.
Special Situations, an investment company that owns about 8.5% of the Costa Mesa drug maker, including options, met with investors who own about 35% of ICN’s stock, according to David Batchelder, an ICN board member and managing member of Relational Investors, which owns 2% of ICN.
Closely held Special Situations has clashed with ICN since the company said in June that it would sell a minority stake in its Ribapharm hepatitis-drug unit to the public and spin off part of another unit. Special Situations has proposed its own reorganization plan and said in a Securities and Exchange Commission filing that it met recently with a biotechnology company who expressed interest in one of ICN’s businesses.
ICN declined immediate comment.
Shares of ICN rose 19 cents to 29.38 on the New York Stock Exchange. The stock has fallen about 14% since ICN announced its reorganization June 14.
Special Situations contends ICN’s plan to sell a piece of Ribapharm in an initial public offering fails to address investor concern about ICN’s exposure to the troubled Eastern European market. The investment firm also said Chairman Milan Panic would wield too much power under ICN’s plan.
Instead, Special Situations is seeking a spinoff of ICN’s international and specialty pharmaceuticals business, which includes dermatology products. That would leave Ribapharm as the parent company and create three independent companies.
Special Situations said ICN’s board should instruct the company’s investment bankers to consider an auction of the whole company or parts of it, according to the information in the filing.
ICN has defended its plan, saying Special Situations’ plan to create separate companies in a spinoff would result in a tax rate as high as 39%, forcing some investors to sell shares to pay taxes.
Special Situations has also warned ICN that it may nominate its own slate of directors to the company’s board at its next annual meeting.
ICN, which held its annual shareholders meeting last year on Sept. 22, hasn’t told investors the date of its next meeting.
Companies incorporated in Delaware, as ICN is, must hold their annual meetings at least every 13 months, according to Larry Hamermesh, a law professor at Widener University. If companies fail to meet that deadline, shareholders can file a lawsuit to force a meeting, he said.
