Carl Icahn said he’ll investigate stock sales made by Forest Laboratories Inc. (FRX) Chief Executive Officer Howard Solomon as the billionaire investor pursues his second proxy fight against the drugmaker.
Icahn, in a letter to Solomon today, said Forest management made “a savvy bet against” the New York-based drugmaker’s prospects by selling shares before its top-selling therapy, the antidepressant Lexapro, lost patent protection in March.
“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,” Icahn, 76, wrote.
Icahn, Forest’s second-largest stockholder with 9.9 percent of shares outstanding as of May 29, has nominated four directors and last week sued the company for access to its books and records. Icahn failed last year to get any of his four nominees elected to the board.
Icahn also urged Solomon to avoid a “contentious and costly proxy fight” and give him board seats. That strategy allowed Icahn to place two directors on the board of Cambridge, Massachusetts-based Genzyme Corp. in 2010 after posting a slate of four nominees. Genzyme was sold to Paris-based Sanofi last year for about $20.1 billion.
Forest said its shareholders support the company’s current direction.
“We are not surprised by Mr. Icahn’s theatrical display of self-serving rhetoric, but his public rants do not serve any useful purpose,” the company said in a statement. “Forest has always been willing to listen to its shareholders who offer substantive and helpful suggestions.”
Icahn contends that Solomon sold more than $500 million of Forest stock and oversaw a decline of 50 percent in the company’s share price. He also has demanded the company provide a succession plan for the 84-year-old chief executive officer and today criticized the promotion of Solomon’s son, “whose only other experience involves promoting movies,” Icahn wrote in his letter.
The stock fell 68 percent from a high of $57.84 in 2007 to $18.79 in March 2009, and has rebounded since then. Forest rose 2.3 percent to $35.79 at the close of trading today.
Forest said in its June 29 statement that Icahn has ignored the progress the company has made in the last year, such as bringing three drugs to the market and filing for approval of two others. The drugmaker also said it’s involved in “ongoing succession planning,” and that it would be “both inappropriate and unusual” to announce a successor to Solomon now.
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