Vivus Sued by First Manhattan Over Certification of VoteMeg Tirrell and Phil Milford
Vivus Inc.’s largest shareholder, First Manhattan Co., asked a Delaware judge to certify results of an incomplete vote by the company’s shareholders, claiming it had enough votes to win its proxy fight.
Vivus, maker of the obesity drug Qsymia, solicited proxies for an annual meeting set for yesterday and adjourned the meeting July 14, purportedly to correct misleading statements from the dissident investor, according to the complaint filed today in Delaware Chancery Court in Wilmington.
Vivus directors’ “transparent attempt to entrench themselves in office” violates Delaware law, First Manhattan said in the complaint. First Manhattan, a New York-based investment firm with 9.9 percent of Vivus’s shares outstanding, nominated nine directors to replace the Mountain View, California-based company’s entire board.
First Manhattan asked a judge to block the directors from soliciting proxies and order election officials to certify the votes that were present. In a later statement today, the investor said it continues to seek a settlement with Vivus, offering the drugmaker three seats on the board if all nine of the First Manhattan nominees are elected.
“After a hard fought proxy fight, as of Sunday, July 14, 2013, FMC was poised to deliver sufficient votes at the annual meeting to replace the incumbent directors with its nominees,” First Manhattan said in its complaint.
Vivus said in a July 14 statement that it was delaying the meeting until July 18 after reporting comments to the Securities and Exchange Commission by First Manhattan advisers that the drugmaker says were misleading.
“The reason for the adjournment was to provide our stockholders the additional time necessary to consider accurate information and make informed voting decisions that are not tainted by the false and misleading statements made by FMC,” Peter Tam, president of Vivus, said yesterday in an e-mailed statement. The company wasn’t immediately available to comment today.
First Manhattan also has said it would replace Chief Executive Officer Leland Wilson. The investor has criticized Vivus’s strategy to sell Qsymia, which was approved in July 2012 by the Food and Drug Administration, and said the board hasn’t acted independently.
Vivus lost more than half its market value in the 12 months ended in June as initial sales of Qsymia, coming in at $4.1 million in the first quarter, disappointed investors. The shares rebounded 17 percent in the two weeks ended July 12 as investors speculated the dissidents may gain ground.
Vivus declined less than 1 percent to $14.40 at 4 p.m. New York time.
The case is First Manhattan Co. v. Vivus Inc., CA8731, Delaware Chancery Court (Wilmington).