Carl Icahn Agitates for Big Change at Major Drug Maker
* This post was updated with a response from Forest Labs
Carl Icahn is no stranger to conflict and controversy.
But this time, his rhetoric isn’t only scathing, it’s also rather serious.
Forest Labs CEO Howard Solomon is the unlucky corporate figure to land in Icahn’s sites.
And what Icahn says in an open letter as well as during a live interview on CNBC’s Fast Money will – at the least - raise eyebrows if not a whole lot more.
Of course, Icahn is not an objective figure in these events; he has been a vocal critic of the management team at Forest Labs for quite some time. Last year he waged a proxy fight to wield greater influence over the company but he lost.
This year – it appears Icahn intends to escalate the rhetoric and take his attacks to a whole new level. In an open letter to CEO Howard Solomon, Icahn writes:
I have given a great deal of thought to the question of why you are afraid to give us board representation. I believe I have deduced the answer…. Several years ago you began a pattern of selling Forest stock at prices substantially higher than today’s price. Those sales now look to me like a savvy bet against the prospects of a company that was not prepared to meet the calamitous events that would befall it several years in the future when Lexapro went off patent. (Click here to see the full letter)
“We have a real problem with this company,” says Icahn on CNBC. “They knew Lexipro was going off patent and I don’t know that was fully disclosed."
But it’s a later passage in the open letter, that’s really fiery. He says:
However, unfortunate loyal shareholders that were not privy to your knowledge and that still hold stock today have suffered very significant losses. You, on the other hand, who have sold over $500 million worth of Forest stock, are in an excellent position. Be assured, we intend to thoroughly investigate by all available means whether the knowledge you had at the time you sold your stock was fully disclosed to other less fortunate shareholders and to determine how you were so prescient in selling your Forest stock at prices well above the current market.
Again, it's important to note that Icahn has an agenda. Icahn owns about 26.4 million shares, or 9.92 percent, of Forest, making him the second-largest investor in the U.S. drugmaker.
After the conversation with Carl Icahn was broadcast on CNBC, Fast Money received the following response from Forest Labs.
"We are not surprised by Mr. Icahn's theatrical display of self-serving rhetoric, but his public rants do not serve any useful purpose. Forest has always been willing to listen to its shareholders who offer substantive and helpful suggestions. We believe that the Company's shareholders support our prospects to build value. Forest continues to advance its pipeline and is well positioned for the future. As we did last year when Forest shareholders decisively rejected his slate, we will respond appropriately to Mr. Icahn in due course."
Posted by CNBC's Lee Brodie
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Trader disclosure: On July 2, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Dan Nathan is long BAC; Dan Nathan is long C; Dan Nathan is long JPM; Dan Nathan is long XLF; Dan Nathan is long IBM; Dan Nathan is long WMT; Dan Nathan is long RIMM; Dan Nathan is long SBUX; Dan Nathan is long BAC JULY 6 PUTS; Dan Nathan is long C JULY 28/25 PUT SPREAD; Dan Nathan is long JPM JULY 32/28 PUT SPREAD; Dan Nathan is long XLF JULY 14/12/10 PUT FLY; Dan Nathan is long IBM JULY 190/180 PUT SPREAD; Dan Nathan is long WMT JULY 67.50 PUTS; Dan Nathan is long RIMM JAN 20 CALLS; Dan Nathan is long SBUX AUG 50/45; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long PNC; Joe Terranova is long USB; Joe Terranova is long TCBI; Joe Terranova is long SBUX; Joe Terranova is long MNST; Joe Terranova is long PXD; Joe Terranova is long WFM; Joe Terranova is long NXPI; Joe Terranova is long NKE; Joe Terranova is long UPL; Joe Terranova is long AAPL; Joe Terranova is long EMC; Joe Terranova is long LPX; Pete Najarian is long AAPL; Pete Najarian is long AAPL CALLS; Pete Najarian is long BAC CALLS; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long NKE CALLS; Brian Kelly is long QQQ; Brian Kelly is long TLT; Brian Kelly is short British Pound
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