Icahn goes to court, alleging Forest Labs has "poison pill" built into major license accord

According to billionaire investor Carl Icahn, who engaged in a long-running bitter proxy battle trying to gain greater control over Forest Laboratories (NYSE: FRX) by nominating board directors (The Pharma Letters passim), the US drugmaker has publicly filed a major licensing agreement that it entered into with Cypress Bioscience in 2004.

That agreement contains a change of control provision that allows the license to be voided by Cypress if there is a change of control at Forest that is not approved in advance by the Forest board, irrespective of whether or not that change of control impairs Cypress, which is a takeover shield or “poison pill” action.

It seems that the only purpose for a provision like this is entrenchment at Forest, he stated. The provision affords no protections to Cypress, as the decision to trigger this provision that can have significant adverse consequences for Forest is solely based on a unilateral decision by the Forest Labs board itself. Accordingly, said Mr Icahn, “we believe that this provision was added at the insistence of Forest Labs, not Cypress, in an attempt to surreptitiously implement an anti-takeover measure.”