UPDATE 4-Elan gets injunction vs directors, slams investor
* Non-executive directors want to hold their own probe
* Elan criticises activist investor Ib Sonderby
* Directors come under fire in shareholder poll
* Elan shares down ahead of expected news of rival-analyst
* Elan shares down 1 pct at 3.6 euros, underperforming index
(Recasts after results of shareholder poll)
By Carmel Crimmins and Padraic Halpin
DUBLIN, Sept 7 (Reuters) - Irish drugmaker Elan (ELN.I) (ELN.N) stopped two non-executive directors from launching a parallel probe over corporate governance at the drugmaker, as criticism spread from shareholders to within its own board.
Elan said on Tuesday it was granted an Irish High Court injunction to prevent "dissident directors" Vaughn Bryson and Jack Schuler from taking action, believing such a move would prejudice a review the company was taking itself.
Investors in Elan, which co-markets the multiple sclerosis drug Tysabri with U.S. biotech company Biogen Idec (BIIB.O), are concerned about potential conflicts of interest involving its chairman and a large severance package for the chief executive.
Some of those investors also want to see at least three directors booted off its 14-member board, a poll of 298 shareholders conducted by Danish activist investor Ib Sonderby found on Tuesday. [ID:nN07218637]
Through his website, www.saveelan.com, Sonderby, 50, has created a rallying point for angry Elan investors who have seen their shares fall 86 percent over the past two years and increasingly see him as David to Elan's Goliath. [ID:nN18210938]
Elan criticised Sonderby in an 18-page letter sent to shareholders ahead of a conference call the former stockbroker will hold on Wednesday to update investors on his campaign against Elan's management.
"We presume that Mr. Sonderby is mostly concerned about the price of the stock as would be his right as a shareholder," Chief Executive Kelly Martin said in the letter.
"While we cannot directly control the price, we do remain resolutely focused on the fundamentals and improving them," Martin said, reiterating that the trends he expected to deliver a profit at operating level this year would carry into 2011.
Sonderby's poll asked who should be removed from the board and Elan Chairman Kyran McLaughlin and Kieran McGowan, who is also chairman of Ireland's biggest listed company CRH (CRH.I), received the most votes.
Elan has said McLaughlin would retire as chairman and a replacement would be chosen by September or October.
Both men were opposed by 28 percent of shareholders when re-elected to the board in May. Gary Kennedy, a former director of Allied Irish Banks (ALBK.I), came in third place in the Sonderby poll.
Shares in the company were down 1.2 percent at 3.6 euros by 1609 GMT, underperforming a 0.9 percent lower Irish Stock Exchange index .ISEQ.
Ian Hunter, an analyst at Goodbody Stockbrokers, said the shares were taking a hit ahead of expected news this week on a U.S. regulatory review of a rival multiple sclerosis drug from Novartis (NOVN.VX).
"Prior to that kind of news sometimes there can be weakness in the share price," Hunter said, adding that the boardroom rift was a sideshow.
"At the board level it (the injunction) is a distraction but not for the day-to-day running of the company."
Schuler, a former Abbott Laboratories (ABT.N) executive, and Bryson, a former chief executive of Eli Lilly (LLY.N), were given seats on Elan's board last year as part of efforts by the company to quell criticism of its strategy.
Neither could be reached for comment.
Elan said on Tuesday that Schuler and Bryson had threatened to take legal action in the United States which would have interfered with the company's review -- commissioned in May -- and the results of which would be presented at the next board meeting scheduled for Sept. 15.
Sonderby, who controls more than 2 million Elan shares between his own holdings and those of Danish companies on whose boards he sits, questioned the independence of the review.
"While I am encouraged by the board's willingness to audit its own behavior, the recent court proceedings (the injunction) raise some concerns about the independence of this investigation," he said in a reply addressed to shareholders. (Additional reporting by Toni Clarke in Boston; Editing by Sharon Lindores)
- Tweet this
- Share this
- Digg this