ICN Executives Push Battle for Control to New Level

Taking a page from political campaigns, leaders of ICN Pharmaceuticals Inc. pushed their bitter battle for control of the Costa Mesa drug maker to a new level Thursday with an eye-popping, full-page newspaper advertisement attacking a dissident group of shareholders.

With the annual meeting set for Wednesday, ICN’s executives assailed the group’s leader, Swiss investor Tito Tettamanti, and its slate of three nominees for the board of directors. It urged shareholders to take a closer look at the dissidents and to vote for management’s nominees.

The harsh tone of the ad, which depicts a bulging eye peering through a magnifying glass beneath the headline “Take a closer look at Tito,” reflects ICN’s concern about its prospects of prevailing, said Jason Montgomery of the Investor Responsibility Research Center in Washington, a group that advises institutional investors.

“If they’re getting ugly this late in the game, they probably have a fairly good idea that things might not be going their way,” he said.

ICN spokesman Jack Sholl said the ad is “not an act of desperation” but rather part of a larger campaign to win the proxy contest. Only the bold graphics separate it from other ads that typically appear during such battles, he said.

In a headline that looks as if it came from a B-movie poster, the ad contends that one of the dissidents’ nominees headed a company whose stock value fell 59% during his tenure and then left the firm under pressure. Stock in another nominee’s company fell 50% in a day amid rumors of “an investigation of a possible health-care fraud.”

But the ad did not provide any details. It listed ICN’s nominees, the gains in its stock value over various periods and stated: “The choice is clear. Vote for independence, quality and experience. . . . Vote for the ICN nominees.”

The statements about the dissidents’ nominees are exaggerated and distorted, said Herbert Denton, president of Providence Capital Inc. in New York, another protester. He said the disaffected shareholders would refrain from “getting into the mud” with ICN.

Eric Knight, managing director for Tettamanti’s Special Situations Partners Inc., accused ICN of trying to divert attention from its failure to move fast enough on its plan to split into three companies. The investor holds a 4% stake.

ICN’s harsh approach could turn voters off, said Mary-Ellen Robinson, a policy director at Proxy Monitor Inc., a New York investor advisor firm that endorsed ICN’s candidates this week.

“It’s a little too dirty, rotten, scoundrelish,” she said.

Both sides have played hardball. ICN sued the dissidents this month in New York over the group’s proxy statement soliciting votes, and Tettamanti sued ICN Chairman Milan Panic in Switzerland in March over alleged disparaging remarks made about the Swiss investor. Under pressure from securities regulators, ICN in April retracted the statements.

“You usually don’t see this kind of venom spewed out in public about these things,” Montgomery said.

The company’s ad was published in the Wall Street Journal less than a week after Institutional Shareholder Services, another group that advises institutional investors, endorsed the dissident slate.

ICN stock rose 13 cents Thursday to close at $29.90 on the New York Stock Exchange.