If at first an open letter doesn't succeed, sue, sue, and sue again.
Last week, Carl Icahn sent a letter to Amylin Pharmaceuticals demanding that it reopen the nominating process for its board of directors given the recent report that Bristol-Meyers Squibb made an offer for the company.
Not surprisingly, the biotech ignored the request, so Icahn reportedly sued the company. He's also requested that the company open its books, presumably so he can figure out if the company really is worth the $22 per share Bristol-Myers reportedly offered. If the company doesn't respond, which seems pretty likely, Icahn plans to sue on that account as well.
I agree with the activist investor: Amylin should come out and say whether Bristol-Myers approached the company and let investors know whether it plans to seek a sale or not. But I'm not sure these lawsuits, which appear to me to be pretty frivolous, are helpful. All they seem to be doing is wasting Amylin's money on lawyer fees, which is of course a large chunk of Icahn's money since he owns nearly 9% of the company.
Instead of being antagonistic, how about working with the company? Icahn negotiated with Genzyme to get two seats on the board rather than trying to get four nominees elected by shareholders, which eventually led its sale to AstraZeneca . Perhaps Icahn has tried that already; he does have two friends he got elected to Amylin's board in a previous proxy fight.
Icahn could also just wait until next year's board elections, although I realize that's like 13 years in activist-investor time. But he has shown some patience in achieving full value for his investments. Icahn was elected chairman of ImClone Systems in 2006, but didn't get an offer from Bristol-Myers for nearly two years. And then it took a few more months before Eli Lilly topped the offer.
What's Icahn's next move? Expect a lot more rhetoric.
What's your next move? It seems to me that unless Amylin plants a for-sale sign in the front lawn or Bristol-Myers or perhaps another suitor comes out and says it's interested, Amylin's shares are headed back near where they were before the buyout leak was reported. Unless you're more interested in betting on board decisions than product launches, these things are best watched from the sidelines.
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