Forest Laboratories Adopts Stockholder Rights Plan and Declares Dividend Distribution of Preferred Share Purchase Rights
August 27 2012 - 5:03PM
Business Wire
Forest Laboratories, Inc. (NYSE: FRX) today announced that its
newly constituted Board of Directors adopted a stockholder rights
plan and declared a dividend distribution of one Preferred Share
Purchase Right on each outstanding share of Forest Laboratories
common stock.
The Board adopted the rights plan in response to the recent
rapid accumulation of a significant portion of Forest’s outstanding
common stock. The rights plan is intended to protect the Company
and its stockholders from efforts to obtain control of the Company
that are inconsistent with the best interests of the Company and
its stockholders. The rights plan also has an exception for an
offer for all shares that is accepted by a majority of the
Company’s shares and treats all shareholders equally.
Howard Solomon, Chairman and Chief Executive Officer of Forest,
said: “After concluding a second proxy contest during which he
repeatedly – and erroneously – disparaged Forest’s business model
and growth prospects, Mr. Icahn increased his already significant
position in Forest with rapid open market purchases. In light of
these recent developments, 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.”
The Rights will expire in 12 months unless the rights plan is
ratified by the Company’s stockholders.
The Rights will be exercisable only if a person or group
acquires 12% (or 20% in the case of a 13G Institutional Investor,
as defined in the rights plan) or more of Forest’s common stock. If
a stockholder’s beneficial ownership of Forest’s common stock as of
the time of this announcement of the rights plan and associated
dividend declaration is at or above the threshold applicable to it
(including through entry into certain derivative positions), that
stockholder’s existing ownership percentage would be grandfathered,
but the rights would become exercisable if at any time after such
announcement the stockholder increases its ownership percentage by
0.001% or more. Each Right will entitle stockholders to buy one
one-thousandth of a share of a new series of junior participating
preferred stock at an exercise price of $100.
If a person or group acquires 12% (or 20% in the case of a 13G
Institutional Investor) or more of Forest Laboratories’ outstanding
common stock, each Right will entitle its holder (other than such
person or members of such group) to purchase, at the Right’s
then-current exercise price, a number of Forest Laboratories’
common shares having a market value of twice such price. In
addition, if Forest Laboratories is acquired in a merger or other
business combination transaction after a person has acquired in
excess of the applicable percentage thresholds the Company’s
outstanding common stock, each Right will entitle its holder to
purchase, at the Right’s then-current exercise price, a number of
the acquiring company’s common shares having a market value of
twice such price. The acquiring person will not be entitled to
exercise these Rights.
Prior to the acquisition by a person or group of beneficial
ownership of the Company’s common stock equal to or in excess of
the applicable percentage thresholds, the Rights are redeemable for
$.001 per Right at the option of the Board of Directors.
Certain synthetic interests in securities created by derivative
positions — whether or not such interests are considered to be
ownership of the underlying common stock or are reportable for
purposes of Regulation 13D of the Securities Exchange Act — are
treated as beneficial ownership of the number of shares of the
company’s common stock equivalent to the economic exposure created
by the derivative position, to the extent actual shares of the
company’s stock are directly or indirectly held by counterparties
to the derivatives contracts.
The dividend distribution will be made on September 7, 2012,
payable to stockholders of record on that date, and is not taxable
to stockholders. The Rights will expire on August 27, 2015;
provided that if our stockholders have not ratified the rights plan
by August 26, 2013, the Rights will expire on such date. In
addition, the Rights automatically expire concurrently with (but no
earlier than 100 days after the commencement of such qualifying
offer) the purchase of 50% of our outstanding common stock on a
fully diluted basis pursuant to a tender or exchange offer for all
of the outstanding shares of Company common stock at the same price
and for the same consideration, provided that the offeror
irrevocably commits to purchase all remaining untendered shares at
the same price and the same consideration actually paid pursuant to
the offer.
Forward-Looking Information
Except for the historical information contained herein, this
document contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and any subsequent SEC filings.
About Forest Laboratories
Forest Laboratories' (NYSE: FRX) longstanding global
partnerships and track record developing and marketing
pharmaceutical products in the United States have yielded its
well-established central nervous system and cardiovascular
franchises and innovations in anti-infective, respiratory,
gastrointestinal and pain management medicine. Forest’s pipeline,
the most robust in its history, includes product candidates in all
stages of development across a wide range of therapeutic areas. The
Company is headquartered in New York, NY. To learn more, visit
www.FRX.com.
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