CARL ICAHN ON FOREST LABS ACQUISITION: "ANOTHER VICTORY FOR ACTIVISM."
New York, New York, February 18, 2014 / — Carl Icahn today released the following statement regarding Forest Laboratories, Inc. (NYSE: FRX):
We were extremely pleased with the announcement this morning that Forest Labs is to be acquired by Actavis in a transaction that values Forest at approximately $89.48 per share. This is a huge win for ALL shareholders of Forest Labs and yet another validation of the activist investment philosophy in general. An investor that had bought Forest shares on November 16, 2009, the date our investment in the company was first made public, and held those shares through today, would have paid $28.97 per share and realized a total return of 209% (as compared to a total return of only 84% for the S&P 500 Index over that same period). The annualized return for this investment would have been over 30% (as compared to an annualized return of only 15% for the S&P 500 Index over that same period). Over the period since the Icahn Group began purchasing the stock, the common shareholders of Forest have enjoyed an aggregate gain in market value of almost $17 billion (including share repurchases), an increase of over 193%. We believe that our activism did much to help bring about the great result announced today.
Our investment in Forest is a textbook example of the tremendous shareholder value creation that can be achieved when boards and managements work hand in hand with activist investors, as opposed to wasting corporate assets in unnecessary fights instigated by so-called "defense" advisors. When we first got involved with Forest, the stock was trading at around $29 per share and the company faced huge problems stemming from the failure to adequately prepare for patent expirations for its biggest drugs, as well as undisciplined spending and corporate governance shortcomings. Throughout our campaign, we consistently maintained that Forest must either become much larger or be acquired to realize its full potential. Through two proxy contests, a settlement that obviated a third, and much Sturm und Drang, we were ultimately able to cause the election of two new directors. We were then instrumental in bringing Brent Saunders on board as the new CEO of Forest last year, and we have worked cooperatively and constructively with Mr. Saunders and the board to help increase value for all shareholders.
As well as Forest shareholders have done here partially as a result of our efforts, the shame is that the fighting could have been avoided and shareholders could have realized even more value had the company's advisors been more interested in bringing the parties together rather than burnishing their own brand as "defense" wizards. We believe that proxy contests and similar costly and time-consuming distractions can in many cases be avoided were it not for the dubious and self-interested advice of activist defense counselors, which so often seems to be to "just say no" and to "defend our island, whatever the cost may be"[i] – and the cost is usually at the expense of shareholders.
But to quote Shakespeare, "All's well that ends well" and we applaud Brent Saunders, who, in less than 6 months at the helm, has helped to bring about in my opinion one of the best pharma mergers in the last decade. I as one of the largest shareholders of Forest can only say thank you – and thank you as well to the entire board and management team for delivering this terrific result.