Forest Laboratories, Inc. (NYSE:FRX) and activist investor Carl Icahn are at it again. Reuters’ Bill Berkrot and Nadia Damouni report this morning that the drug maker is trying to dodge a third proxy fight with its second-largest shareholder before the company’s next annual meeting, which is scheduled for this summer.
The Latest Battle Between Forest Labs, Icahn
The reporters cite two sources who said over the course of this past year, Forest Laboratories, Inc. (NYSE:FRX) and Icahn have been involved in negotiations in an attempt to avoid a third proxy battle. However, there’s no guarantee that there will be an easy settlement between the company and Icahn, who owns an 11.5 percent stake in the company.
The company has until the middle of this month to file a list of director candidates to replace CEO Howard Solomon. Icahn has been extremely critical of the company’s leadership and has said in the past that it has been poorly managed and that it performs more poorly than its peers within the industry.
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Finding A Replacement For Forest Laboratories’ CEO
Current CEO Solomon has said he will retire at the end of this year, and one of Icahn’s complaints against the company was that he attempted to put his son at the helm of the company without any review of other potential candidates.
One name that has been floated as a potential alternative candidate is Brent Saunders, CEO of Bausch & Lomb. He currently serves on Forest Laboratories, Inc. (NYSE:FRX)’s board of directors. Saunders is expected to leave Bausch after the completion of its acquisition by Valeant Pharmaceuticals Intl Inc (NYSE:VRX)
Icahn’s Arguments About Forest Laboratories
Icahn also apparently believes that Forest Laboratories, Inc. (NYSE:FRX) is not prepared to generate future growth as competition from generic drugs presses in on it. Two of the company’s best-selling products—antidepressant drug Lexapro and Alzheimer’s drug Namenda—face competition from generics in the near future. Also regulators in the U.S. have sent the company several warnings in connection with its marketing practices.
In the proxy battle between Icahn and Forest Labs last year, one of the candidates Icahn nominated for the company’s board ended up being elected. Pierre Legault, who was once CEO of OSI Pharma, joined the board, but Reuters’ sources have said that since then, Legault is been distancing himself from the activist investor.Forest Labs’ Recent Actions
Over the last two years, Forest Laboratories, Inc. (NYSE:FRX) has launched several new products. Its stock price has risen approximately 18 percent since August of last year, coming out ahead of the S&P 500’s 14 percent gain in that same time frame.