The Battle for Amylin Intensifies

The Battle for Amylin Intensifies

Yesterday Amylin (NASDAQ:AMLN) announced they received from Icahn Capital and affiliated funds announcing their intent to nominate a slate of five directors to stand for election at the Company’s 2009 annual meeting. The notice from the Icahn group also states their intent to submit a proposal for shareholder approval requesting that the Company reincorporate in the state of North Dakota.

The company also received a separate notice from Black Bear Fund I, L.P. that it, together with its investment advisor Eastbourne Capital Management, L.L.C. and its controlling owner and managing member Richard J. Barry, also intends to nominate a separate slate of five directors to stand for election at the Company’s 2009 annual meeting.

Back on November 3rd of last year in a SEC filing Eastbourne stated “The Filers have previously disclosed that they believe the Stock is substantially undervalued and that they are exploring ideas to enhance shareholder value.  In that connection, the Filers intend from time to time to have discussions with management of the Issuer, other shareholders and third parties, regarding actions or transactions that, if effected, may enhance shareholder value, including a possible acquisition by a third party of the Issuer.  The Filers can give no assurance that any of the foregoing parties will have interest in any of the actions or transactions that are raised during such discussions or that any such actions or transactions will ever be agreed upon or consummated by the relevant parties.”

Given this series of events, Mr. Icahn’s history and statements made by Eastbourne, Amylin’s third largest shareholder, it appears Eastbourne and Icahn are joining forces with the ultimate goal being the sale of the company. This is further reinforced by the request that the company reincorporate in North Dakota.

According to The Harvard Law School Corporate Governance Blog in post back in April of 2007 from Larry Ribstein from the University of Illinois College of law titled The North Dakota Experiment

“Last week the North Dakota Legislature adopted the North Dakota Publicly Traded Corporations Act.  To quote the Act’s sponsor, the North Dakota Corporate Governance Council, the Act “provides a governance structure for publicly traded corporations that gives shareholders greater rights than they currently have under other state laws.  It has been designed to reflect the best thinking of institutional investors and governance experts and addresses each of the current hot topics in corporate governance.”  A director of the Council, and the law’s drafter, is William H. Clark, Jr., from Delaware’s neighbor, Pennsylvania.

In brief, the law permits firms incorporated under North Dakota law after July 1, 2007 to elect to include a provision in their articles that they elect to be subject to the new statute.  Shareholders then get a set of provisions that looks like a shareholder rights advocate’s wish list, including majority voting for directorsadvisory shareholder votes on executive compensation committee reports, a right for certain shareholders to propose board nominees on the company’s proxy statementreimbursement of proxy expenses to shareholders to the extent they are successful in getting nominees elected; a requirement of a non-executive board chair; and restrictions on poison pills and other takeover devices.  The Economist recently applauded the Flickertail State’s plan “to poach company incorporations from Delaware” as “injecting some much-needed competition into the field of corporate law and governance.” 

These moves by Icahn and Eastbourne should send a second signal and not be viewed just as an attempt to sell the company. As Diabetic Investor has pointed out on several occasions besides this shareholder fight, the company is dealing with several critical issues. Diabetic Investor believes that Icahn would not make these moves without thoroughly investigating the company. Being the third largest shareholder Eastbourne would not join him if they too did not believe the issues would be resolved in Amylin’s favor.

It appears that Icahn and Eastbourne believe, as Diabetic Investor does, that the upcoming label change for Byetta will be minor and the potential for LAR to be a mega-blockbuster will help them sell the company for a premium price. Although no one knows for sure and Icahn isn’t talking but Diabetic Investor has this feeling that companies other than Lilly (NYSE:LLY), Amylin’s current partner, have expressed an interest in acquiring the company.

The question is will this shareholder fight distract Amylin management at a time when they are facing critical issues at the FDA. For their part the company has not publicly taken a position on how they intend to deal with Icahn or Eastbourne. Some would say that Amylin would be foolish to capitulate when LAR is so close to getting to the FDA. Others believe that the current management team has underperformed and is unable to maximize shareholder value.

One thing is certain things at Amylin are getting more interesting by the day.