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Icahn says Actavis-Forest deal validates shareholder activism

By Toni Clarke

(Reuters) - After a nearly three-year campaign at Forest Laboratories Inc that spanned two proxy battles and the ousting of a chief executive, billionaire activist investor Carl Icahn has once again ended up on top.

The proposed $25 billion acquisition of Forest Labs by generic drug maker Actavis Plc is the biggest deal yet to emerge from Icahn's many forays into healthcare.

Icahn, Forest's second-largest shareholder, proclaimed the deal to be "yet another validation of the activist investment philosophy" and said the company's shareholders had realized a 209 percent return since his earliest stake was disclosed in November 2009.

"He's a smart and astute investor and he gets the strategic rationale of this deal," Forest Labs Chief Executive Brent Saunders said of Icahn. "My sense is he will continue to be a good shareholder, albeit in a smaller position."

Saunders and Actavis CEO Paul Bisaro described in an interview how the deal came together quickly after they met during a social event at a J.P. Morgan healthcare conference in January. They sealed the agreement this weekend, helped by snowstorms that confined their teams to a New Jersey hotel.

Meanwhile, Icahn kept tabs on the discussions from his vacation home in Miami.

"I met with Brent a number of times to discuss what was happening," Icahn said in a telephone interview. "He even flew down to Florida while I was there to discuss the deal and strategy."

The agreement wraps up a campaign that began in 2011 and led to the departure of CEO Howard Solomon in 2013 after more than 35 years at the company's helm. And it comes after some of Icahn's more recent campaigns have had mixed results.

Earlier this month Icahn gave up on his attempt to push for more share buybacks at Apple Inc after the iPhone maker increased its repurchase program, though not to the level that Icahn had demanded.

News of the Forest deal increased the value of Icahn's Forest holdings by nearly $650 million over the weekend, based on the number of shares held at the end of December, and generated a profit for him of roughly $1.7 billion.

Over the past decade, Icahn has been involved in the sale or turnaround of companies ranging from ImClone Systems, which was sold to Eli Lilly & Co for $6.5 billion in 2008, to Genzyme, which was acquired by Sanofi in 2011 for $20 billion.

Publicly available data suggests that Icahn's healthcare investments, excluding Forest, have generated a return of about $2 billion over the past eight years.

Much of that success was driven by his former healthcare lieutenant, Alexander Denner, and by Richard Mulligan, an internationally recognized genetics professor at Harvard University and frequent Icahn board nominee.

Denner and Mulligan formed their own activist healthcare fund, Sarissa Capital Management, last year, but Icahn said he has no plans to stop investing in healthcare companies.

"We're opportunistic," he said. "I look for very undervalued companies that are poorly managed. The industry isn't that important."

(Reporting by Toni Clarke in Washington, Caroline Humer and Jennifer Ablan in New York; Editing by Michele Gershberg and Frank McGurty)

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