Bausch Health has launched a shareholder rights plan—also known as a poison pill defense—designed to prevent any one entity from taking control of the company to the detriment of other shareholders.
Bausch Health announced that well-known activist investor Carl Icahn has carved out a 34% stake in the company.
The Tuesday revelation comes after Bausch last week adopted what is commonly known as the “poison pill” defense strategy—a shareholder rights plan that would kick in when any one entity acquires at least 20% of the company’s voting shares. The poison pill is designed to “protect against . . . ‘creeping’ take-over bids that may serve to benefit certain shareholders to the detriment of others,” as per Tuesday’s release.
Bausch revealed that Icahn, who originally owned just 9.4% of the company’s shares, entered into equity swap agreements with other shareholders, eventually amassing some additional 90.7 million common shares of Bausch, corresponding to a roughly 24.6% stake in the company.
Last month, Bausch directors enlisted an independent counsel to review these equity swaps. Icahn at the time “refused to provide the copies of the swap agreements,” Bausch claimed, though the shareholder did reveal that he had accumulated his 34% stake through more than 100 trades from May 2021 to September 2023.
Of note, Bausch’s independent counsel also noted that these swap “agreements do not confer voting or dispositive power over the referenced shares.”
Icahn has built a reputation for carving out large stakes in various pharma companies, often with the goal of influencing executive decision-making. His targets within the health and life sciences spaces run the gamut, from smaller biotechs like Amylin to Big Pharma players such as Bristol Myers Squibb and Amgen.
Most recently, Icahn set his sights on sequencing giant Illumina, moving in April 2023 to place three of his representatives on the company’s Board of Directors. Icahn took issue with Illumina’s doomed acquisition of cancer detection start-up GRAIL in 2020, which cost more than $7 billion and was quickly met with strong antitrust backlash from European and U.S. regulators.
In December 2023, as Illumina was going through the process of divesting GRAIL, Icahn again blasted the company’s leadership, slamming their “negligence,” which he claimed cost Illumina “billions of dollars.” Amid Icahn’s assaults, Illumina CEO Francis DeSouza stepped down.
It is not yet clear why Icahn has been amassing Bausch shares or if the company’s poison pill strategy is related to Icahn’s increasing stake.
