Forest Labs: More Fruits From Shareholder Activism For Icahn

Forest Labs: More Fruits From Shareholder Activism For Icahn
By Forest Laboratories, Inc. (Forest Laboratories, Inc.) [Public domain], <a href="">via Wikimedia Commons</a>

“Activism proves to be working well at Forest Laboratories, Inc. (NYSE:FRX). Since Sept 10 (when new CEO Brent Saunders arrived) the co’s stock is up aprx 57% and 8% today,” exulted Carl Icahn in a Tweet yesterday. (The “8% today” typo was corrected to “18% today” in a subsequent Tweet).

According to a recent shareholder presentation by Icahn Enterprises L.P. (NASDAQ:IEP), the group held 11.4% in Forest Laboratories, Inc. (NYSE:FRX) as on November 29, 2013.

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Is Saunders Icahn’s choice?

According to one analysis, Forest Laboratories, Inc. (NYSE:FRX) CEO Brent Saunders was handed the helm of the company “basically to appease Carl Icahn,” and the appointment was therefore a victory for shareholder activism.

In June last year, after an activist battle with the company, Icahn entered a standstill agreement with Forest Laboratories, Inc. (NYSE:FRX) pursuant to which he and his affiliated entities wrested a seat on the latter’s board and nominated Vincent J Intrieri for the position. Intrieri became the fifth member of the independent committee overseeing succession planning.

Carl C. Icahn said at the time, “We are happy to have been able to avoid the necessity for a distracting fight so that management’s energies, as well as our own, can be focused on more productive purposes. We are pleased that between last year’s proxy contest and this agreement, Forest Laboratories, Inc. (NYSE:FRX)’s 11 person Board now has two additional independent voices. We have a very strong track record of helping to strongly enhance shareholder value through minority board representation. I have spoken to Howard Solomon several times in the last month and do not believe that our views concerning Forest are that far apart.”

Forest Labs: rich pickings for Icahn in the last three months

The Forest Laboratories, Inc. (NYSE:FRX) stock has turned highly bullish over the past few months.

In October the company announced solid Q2 results that beat consensus and provided upbeat guidance.

In December the company announced a $500M savings plan dubbed Project Rejuvenate intended to streamline operations and reduce costs. That same month it acquired the right to a schizophrenia or acute bipolar mania treatment called Saphris from a subsidiary of Merck & Co., Inc. (NYSE:MRK) for $240M plus milestone payments. Following the acquisition Forest Laboratories, Inc. (NYSE:FRX) was upgraded by SunTrust Banks, Inc. (NYSE:STI) to a Buy rating, while Goldman Sachs Group Inc (NYSE:GS)boosted its PT from $55 to $65. The Financial Times said in a report that AstraZeneca might be eying a Forest Labs bid.

Yesterday the stock was up almost 18% after the announcement of its acquisition of Aptalis, a private company specializing in Gastrointestinal and Cystic Fibrosis, for $2.9 billion in cash.

At the time of writing today, the stock is trading at $69.26, down 0.06%.

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