Forest board defends itself against perceived Icahn coup

Forest Laboratories' management has asked shareholders to rebuff an attempt by billionaire investor Carl Icahn to replace four members of the board at the firm's annual general meeting next month.

The company sent a letter to its shareholders yesterday warning that the directors proposed by Icahn are "unqualified" and three of them "have significant conflicts and entanglements that we believe compromise their independence".

The latter came in response to a communication sent to shareholders by Icahn late last week, which suggested that "it is very reasonable for a shareholder of my size and with my track record to ask to nominate two persons to a board - one internal and one independent - without seeking the removal of any incumbent directors".

Icahn currently holds around 10 per cent of Forest's stock, and has insisted that he has no interest in staging a proxy fight and no desire to take control of the company, although this is disputed by Forest's management.

Forest is asking shareholders to reject the nominations of three candidates - Eric Ende, Daniel Ninivaggi and Andrew Fromkin - on the grounds that they all have financial ties to Icahn and so would support his interests in preference to those of the company.

A fourth candidate - Pierre Legault - should be rejected because his "operational track record is questionable at best", according to the letter.

Icahn made a similar attempt to reshape Forest's board last year but was defeated at the 2011 AGM, with shareholders placing their votes behind the directors nominated by the company's management team.

The investor has been critical of Forest's management, including chief executive Howard Solomon who was threatened last year by the US government with a ban from participating in federal healthcare programmes after pleading guilty to illegal marketing of antidepressant products.

Icahn has a track record in this type of activity. He succeeded in getting two directors onto the board of Amylin Pharmaceuticals in 2009, and has been pushing for a sale of the company, in which he holds an 8.9 per cent stake.

Two other companies targeted by the investor - ImClone and Genzyme - were sold to big pharma companies (Eli Lilly and Sanofi, respectively) after his involvement.