BOSTON (Reuters) – Hedge fund Appaloosa LP on Tuesday urged pharmaceutical company Allergan PLC (AGN.N) to split its chairman and chief executive roles, arguing that an independent chair could help boost the company’s sagging share price.
FILE PHOTO – The Allergan logo is seen in this photo illustration in Singapore November 23, 2015. REUTERS/Thomas White/File Photo
Appaloosa’s billionaire founder David Tepper turned up the heat on the maker of Botox one week after the company delivered disappointing earnings and shelved plans to sell its women’s health business, which it had put on the block in May.
“In the wake of last Tuesday’s earnings call … it should by now be readily apparent to all interested and responsible parties that Allergan requires a fresh approach,” Tepper wrote in a letter made public on Tuesday.
“We believed that the introduction of a seasoned independent Chairman with extensive pharmaceutical experience could exert a favorable influence on executive decision-making,” the letter said.
Allergan’s shares have fallen about 20 percent over the past 12 months. On Tuesday they traded up 1.52 percent at $140.61.
Appaloosa, which oversees $12 billion, began pressuring Allergan to separate the roles, currently held by Brent Saunders, and to recruit an outsider to oversee its board in 2018. On Tuesday Tepper said that this is the fourth time he has written to the board to request this change.
Allergan’s “moribund corporate performance and flagging stock price since our letters only deepens our conviction on this point,” he wrote. He also said that splitting the roles is not a controversial move and one that many companies have adopted.
Allergan declined to comment on Appaloosa’s letter.
At the end of the third quarter, Appaloosa owned nearly 2 million Allergan shares, having cut its holdings by 41 percent, a regulatory filing shows.
Last year, both Appaloosa and Senator Investment Group sent a letter to Allergan urging the company’s board to split the chairman and chief executive role and reconsider its acquisition strategy.
Analysts have said that Allergan’s disappointing earnings report last week made it vulnerable to more activist pressure.
Five years ago, Bill Ackman’s Pershing Square Capital Management pressed for the company to sell itself to rival Valeant Pharmaceuticals.
Reporting by Svea Herbst-Bayliss in Boston, Tamara Mathias and Manas Mishra in Bengaluru; Editing by James Emmanuel and Susan Thomas