--Carl Icahn urges nonmanagement board members to consider his
candidates
--Letter is the latest in a back-and-forth between the company
and the activist shareholder
--Mr. Icahn warns of possibility for a contentious proxy
fight
(Updates with comments from Forest Laboratories beginning in the
seventh paragraph and adds more details from Mr. Icahn's letter
throughout.)
By Victoria Stilwell
Activist investor Carl Icahn appealed to nonmanagement directors
at Forest Laboratories Inc. (FRX) on Thursday, asking for his
candidates' representation on the board to prevent a "prolonged and
contentious" proxy fight.
Mr. Icahn is known for his battles with corporate boardrooms and
is the company's second-largest shareholder with a nearly 10%
stake, according to data provided by FactSet Research.
The billionaire investor has been in a long-running battle with
drug maker Forest Laboratories. The skirmish was revived in June
when he nominated four candidates to its board and said he was
seeking records of the company's actions.
In his latest letter, Mr. Icahn said his candidates would
improve the composition and functionality of the board by bringing
a shareholder's perspective. He said he tried to avoid a proxy
fight by nominating two candidates, but Forest Laboratories's Chief
Executive Howard Solomon rejected his request, "claiming that such
shareholder representation on the Board would be a 'distraction,'"
Mr. Icahn wrote.
Mr. Icahn pointed to companies including Amylin Pharmaceuticals
Inc. (AMLN) and Biogen Idec Inc. (BIIB) as examples of companies
that improved after his nominees were on the board. Mr. Icahn went
on to say the company's management has made decisions that leave
the company overdependent on two drugs that have lost or will lose
patent exclusivity.
"I believe it is without question that my candidates have
superior qualifications, would be productive members of the Forest
Labs board, and would be a strong force in replicating the stellar
results that my nominees have helped to produce in the companies
mentioned above," Mr. Icahn wrote.
In a statement, the Forest Laboratories board flatly rejected
the notion that it wasn't fully informed of Mr. Icahn's previous
nominee proposal or that Mr. Solomon acted unilaterally. The board
said it doesn't think Icahn's nominations would be in the best
interest of all shareholders.
"The board is also fully engaged and unanimous in its view that
each of Mr. Icahn's nominees are unqualified, and that his slate
has several conflicts that compromise their independence and
ability to act in the best interest of all Forest
shareholders."
Last August, the drug maker's shareholders rejected Mr. Icahn's
effort to place four of his director nominees on the board and
elected Forest's entire slate instead.
Mr. Icahn earlier this month accused Forest Laboratories Chief
Executive Howard Solomon of selling more than $500 million of stock
ahead of the company's loss of patent exclusivity on antidepressant
Lexapro. A week before, he said he is suing Forest Laboratories in
an effort to get information from the drug maker about its plans
for a successor to 84-year-old Mr. Solomon.
In June, Forest Laboratories reduced its fiscal-year earnings
guidance because of lower-than-expected branded Lexapro sales and
more aggressive pricing for the authorized generic version of the
antidepressant following the March loss of the drug's patent
exclusivity.
Shares were up 2 cents at $35.33 in recent trading. The stock is
up 17% so far this year.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com