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Carl Icahn Increases Stake in Forest Laboratories
Posted by: Holly LaFon (IP Logged)
Date: September 10, 2012 04:58PM

Carl Icahn added 4.52% to his stake in Forest Laboratories Inc. (FRX) at the average price of $34.68 on Aug. 24, 2012, according to GuruFocus Real Time Picks. He owns 30,133,346 shares. The stock price has changed by 2%.

Forest Laboratories Inc. and its subsidiaries develop, manufacture and sell both branded and generic forms of ethical drug products which require a physician's prescription, as well as non-prescription pharmaceutical products sold over-the-counter. Forest Laboratories Inc. has a market cap of $9.22 billion; its shares were traded at around $34.83 with a P/E ratio of 11.8 and P/S ratio of 2. Forest Laboratories Inc. had an annual average earnings growth of 9.7% over the past 10 years. GuruFocus rated Forest Laboratories Inc. the business predictability rank of 4-star.

Icahn first invested in Forest Laboratories in the third quarter of 2009 when the price was an average of $27. The price has increased 15% year to date.

The activist investor has been engaged in a battle with the company, writing several public letters addressing what he sees as its problems. Icahn won one out of four seats he attempted to win on Forest Laboratories’ board on August 15. He won no seats at last year’s vote.

Icahn said in a statement: “I am very pleased with the tremendous support that my nominee, Pierre Legault, obtained from shareholders in winning a seat on the Forest Board. Sadly, our proxy system is set up in such a way that the deck is stacked heavily in favor of incumbent management in proxy contests. THIS IS TRUE PARTICULARLY AT FOREST, where a few shareholders with upwards of 25% of the outstanding shares seem to vote in favor of management no matter how bad the company is performing and how bad its corporate governance is. That is why today’s victory is not only surprising, but I hope and believe that the shareholder message sent will be the first step in bringing good corporate governance to this great company - something that has been lacking for decades.”

Forest commented: “We are gratified by the strong support of our shareholders in re-electing nine of our ten directors. The election of only one of Mr. Icahn’s four nominees reflects our shareholders’ continued confidence in Forest’s strategy, corporate governance practices and the strength of our pipeline and portfolio of products. We would also like to welcome our new director, Pierre Legault, who will join the Forest Board after the vote has been certified. We look forward to working with him in a constructive manner to build value for all Forest shareholders over the long term.”

Forest lowered its earnings guidance for fiscal 2013 due to the loss of its patent on popular antidepressant Lexapro. The company currently has nine other products that have recently reached or it expects to reach the marketplace, with several more in development.

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Guru Discussed: Carl Icahn: Current Portfolio, Stock Picks
Stocks Discussed: FRX,
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