Shareholder Wants to Reclaim ICN Seat
Activist shareholder David Batchelder, unhappy over the pace of ICN Pharmaceuticals Inc.’s proposed restructuring, said he plans to reclaim his position on the board of the Costa Mesa drug maker.
Batchelder said he recently notified ICN in a letter that he wants to rejoin the board, an option open to him as part of an agreement last year between his investment firm and ICN.
Batchelder is the second dissident shareholder to raise concerns in recent weeks that ICN Chief Executive Milan Panic is not moving quickly enough to split ICN into three publicly traded companies, a plan that dissidents say would increase shareholder value.
Earlier, Special Situations Partners Inc., based in the Cayman Islands, said ICN should consider scrapping the plan because of the delays and sell the company instead to the highest bidder.
ICN said Tuesday it is moving forward with the restructuring and is preparing documents in Europe for its international spinoff to go public. The company would not elaborate.
Batchelder resigned from the board in late October after ICN announced its restructuring plan, but left open the possibility of returning. Under an agreement between Batchelder’s firm, Relational Investors LLC, and ICN, Relational can appoint an independent director at ICN’s annual meeting in May if the company “has not made sufficient progress” in carrying out the restructuring.
Bowing to shareholder pressure, the company agreed in October to split into separate companies: Ribapharm Inc., ICN Americas and ICN International. Ribapharm would own the rights to ICN’s top-selling product, the hepatitis drug ribavirin. ICN Americas would assume control of other ICN operations in the United States and Canada, Mexico, Puerto Rico and Latin America, while ICN International would handle business mainly in Eastern Europe and Russia.
Relational, which buys stakes in troubled companies and seeks to turn them around, reduced its ICN holdings to 100 shares, according to a Dec. 31 report to the Securities and Exchange Commission. Batchelder declined to say whether Relational, which held a 2% stake in ICN last October, has purchased additional shares since the beginning of the year.
ICN has struggled of late. Fourth-quarter profits plunged 80%, and the company missed already reduced estimates as costs rose and royalties from ribavirin sales fell.
Tom DesChamps, an analyst with Mehta Partners in New York, said he doubted whether the proposed restructuring would occur within the next four months. In addition to a soft stock market, ICN is grappling with “internal issues,” including disappointing ribavirin royalties, said DesChamps, who rates the stock a hold.
ICN stock closed Tuesday at $26, up 21 cents on the New York Stock Exchange.
