Forest Labs adopts poison pill plan, targets Icahn
NEW YORK (AP) — Forest Laboratories Inc. said Monday it has adopted a shareholder rights plan, also known as a "poison pill," to stop billionaire investor Carl Icahn from taking a bigger stake in the company.
Icahn is the second-largest holder of Forest shares and has recently boosted his stake in the company by about 3 million shares, increasing his stake in the company to 11.2 percent from 9.9 percent. Forest said Icahn has made "rapid open market purchases" since the end of his latest proxy contest with the company. The new shareholder rights plan will go into effect if any investor's holdings exceed 12 percent of the company's stock in the next 12 months.
Poison pill measures are designed to prevent unwanted attempts to acquire or take control of a company. Earlier this year Icahn nominated four candidates to Forest's board of directors. On Aug. 15, shareholders elected one of those candidates while voting down the other three. Icahn also nominated four candidates to the 10-member board in 2011.
Icahn disclosed his latest holdings in a form filed with the Securities and Exchange Commission on Friday.
The largest shareholder in Forest is Wellington Management, which owns a 13 percent stake. Wellington is grandfathered in, but Forest said the shareholder rights plan would go into effect if Wellington increases its holdings by 0.001 percent. The measure will expire in one year unless Forest's shareholders vote to extend it.
"The board has adopted a stockholder rights plan that is designed to ensure that all of Forest Laboratories' stockholders receive fair and equal treatment in the event of any proposed takeover of the company, to guard against abusive tactics to gain control of Forest Laboratories without paying all stockholders a premium for that control, and to enable all Forest Laboratories stockholders to realize the long-term value of their investment in the company," said Chairman, President and CEO Howard Solomon.
Officials with New York-based Icahn Associates weren't immediately available to comment.
Shares of Forest Labs rose a penny to $34.69 Monday. The stock was unchanged in after-hours trading.