Allergan Plc is on course to defeat a non-binding shareholder resolution tabled by David Tepper’s hedge fund Appaloosa LP that would have instructed the drugmaker’s CEO Brent Saunders to immediately give up his role as chairman, people familiar with the matter said on Tuesday.
A loss would have been bruising for Saunders, a prolific dealmaker who has served as CEO of Allergan since 2014. Allergan has committed to separating the CEO and chairman roles no later than the next leadership change when Saunders, 49, steps down, rather than immediately. He has not set any public timetable for his exit.
Enough votes have been cast for Allergan to prevail against Appaloosa, the sources said. However, Appaloosa’s resolution is expected to attract the votes of a substantial minority of Allergan’s shareholders, the sources added, highlighting the displeasure of many investors focused on stricter corporate governance standards.
The sources asked not to be identified because the outcome of the shareholder vote is not yet public. Allergan declined to comment, and Appaloosa could not be reached for comment.
Saunders has held the roles of CEO and chairman since October 2016. Before then Saunders served as CEO of the company alongside Paul Bisaro, who was executive chairman. He left to become CEO of Impax Laboratories Inc.
Two leading shareholder advisory firms, Institutional Shareholder Services LP and Glass Lewis & Co, earlier this month threw their support behind Allergan’s management by recommending that investors vote against Appaloosa’s proposal.
Allergan, under pressure to bolster its sagging stock price, launched a review of its strategy last year. That review is only likely to result in the sale of its relatively small infectious disease unit.
Appaloosa has voiced its discontent with the results of the review and has called for a breakup or sale of the company, citing recent clinical failures such as that of Allergan’s depression treatment rapastinel.
Saunders was instrumental in putting Allergan together through a series of deals with companies including Forest Laboratories Inc and Actavis Plc.
But Saunders’ biggest deal, Allergan’s $160 billion sale to Pfizer Inc was killed in 2016 after the U.S. President Barack Obama’s administration changed the rules on corporate tax inversions. Allergan’s shares have lost nearly half their value since then.
By Svea Herbst-Bayliss and Jessica DiNapoli
Source: Reuters
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