ICN Dissidents Get Proxy Firm Backing

In a blow to the board of ICN Pharmaceuticals Inc., an influential proxy advisory firm that had backed insurgent director nominees last year once again recommended that its shareholder clients vote Wednesday for a slate of dissident candidates.

Institutional Shareholder Services is backing three independent candidates nominated by Franklin Mutual Advisers LLC and Iridian Asset Management. The two investors groups together hold more than 10% of the Costa Mesa drug maker’s stock and are trying to wrest control from Milan Panic, the chairman and chief executive who founded the company 42 years ago.

Three outside directors elected last year have pledged to support the new slate on a nine-member board.

Like the dissidents of last year, disgruntled shareholders charge that the presence of Panic at the helm and what they perceive as questionable management decisions have punished investors and kept well-qualified executives from working at ICN. They also charge that Panic has dragged his feet for several years in splitting the company into three independent firms to enhance shareholder value.

The company last month spun off 20% of Ribapharm Inc., which makes the anti-viral ribavirin used to help treat hepatitis C liver disease.

The investor services endorsement could tip the balance toward dissident board members. The group alleges that the current board has been overly loyal to Panic and that election of the dissidents “would be a tremendous step toward clearing the haze of controversy that appears to be clouding the market’s view of ICN’s true value.”

“At the end of the day, this contest is really about maximization of shareholder value,” the group said in a prepared statement.

ICN contends that the threatened change of control and the almost certain departure of Panic would be disruptive, setting back expansion plans and weighing further on the stock price. Panic has said he plans to step down, but he gave no timetable.

“The dissident shareholders, who have held their stock for less than a year, are, in our view, not interested in what is in the best interests of ICN shareholders over the long term,” ICN spokesman Alan Charles said in a statement.

ICN stock lost 38 cents Friday to close at $27.31 a share on the New York Stock Exchange. The stock has lost 18.5% this year.