AGN up for sale, will it be a deal with IRWD bundled in?

Hedge fund calls for Allergan to consider putting itself up for sale | FirstWord Pharma
Appaloosa hedge fund manager David Tepper on Tuesday sent a letter to Allergan saying the drugmaker should consider a merger or selling itself if it is "unable or unwilling to hold management accountable for its shortcomings or find a suitable replacement." The letter came shortly after Allergan announced that it appointed former Celgene CEO Robert Hugin to its board, but would split the roles of chairman and chief executive, both currently held by Brent Saunders, at the next leadership transition.

Tepper, who has been pushing Allergan to recruit an independent chairman to oversee its board, said the company's decision to make that change only "at some vague future date…once again lays bare your reluctance to hold management accountable for its dismal performance."

Appaloosa has called on Allergan to split the roles of CEO and chairman four times already in less than a year, not counting the latest appeal. "Had you seriously intended to take meaningful action, [Hugin] would have been a credible candidate for chairman given his standing in the industry," Tepper stated in his letter to Allergan.

Tepper drew comparisons between Allergan's latest decision and the company's "aborted strategic review" last year, suggesting both were "lame [attempts] to deflect pressure through token measures." Allergan had initially intended to divest its women's health and infectious disease businesses after completing the review, but Saunders said last October that early buyer interest for the units was below what he felt they were worth.

In response to Tepper's letter, Allergan stated "we strongly disagree that an immediate separation of the CEO and chair positions is warranted [as] implementing a leadership change in the manner Appaloosa is recommending would be highly disruptive to the company and diminish [Saunders'] ability to continue to execute Allergan's strategy." The drugmaker added that "in contrast, the shareholder proposal that our board [is supporting] minimises disruption and allows for the separation of the chair and CEO positions with the next leadership change, as these resolutions typically provide."

According to regulatory filings last week, Appaloosa reduced its stake in Allergan by approximately 42 percent to almost 1.2 million shares at the end of December.

 

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