Exclusive: Elliott hires search firm for Actelion board

ZURICH/LONDON Fri Mar 4, 2011 11:35am EST

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ZURICH/LONDON (Reuters) - Activist hedge fund Elliott Advisors has hired headhunters to find candidates for the board of Actelion (ATLN.VX), sources said, as part of its bid to make Europe's biggest biotech firm consider selling itself.

The sources familiar with the situation said New York-based Elliott, which is dissatisfied with the company's performance after a series of product setbacks, is also using Georgeson, a firm of proxy solicitors, to secure support from other shareholders.

Elliott declined to comment, as did an official at Georgeson's parent company Computershare (CPU.AX), who cited client confidentiality.

Actelion will hold its annual meeting on May 5, and Elliott, its biggest shareholder, with a stake of nearly 6 percent, is looking for backing from other disgruntled investors in the group, which has a market value of $7 billion.

Led by founder and Chief Executive Jean-Paul Clozel, Actelion is determined to stay independent, but some analysts believe it could be the next pharma takeover target after Sanofi-Aventis's (SASY.PA) $20 billion-plus acquisition of Genzyme GENZ.O.

Elliott has called for Clozel and Actelion's chairman, Robert Cawthorn, to resign from the board.

The sources declined to name the firm of headhunters Elliott had hired and said it was too early to say who could emerge as possible nominees.

Industry analysts said proposing its own candidates was a logical step for Elliott, which has a track record of taking on management teams. It is also fighting Du Pont's (DD.N) $6 billion bid for Danisco DCO.CO, arguing it is too low.

Elliott is expected to target experienced pharmaceutical executives as its nominees, with one analyst suggesting possible candidates from companies named previously as bidders for Actelion, such as U.S. biotech giant Amgen (AMGN.O).

POTENTIAL BLOCKBUSTER

Actelion's articles of association say it can have up to 11 board members. It currently has nine. Clozel was last elected to the board in 2008 and will stand for re-election on May 5, since each term lasts three years.

Two other directors are also up for re-election.

Clozel, a former scientist at Roche (ROG.VX), has built Actelion into a major force on the back of Tracleer, a $1.8 billion-a-year drug for a rare but deadly lung disorder.

But investors are increasingly concerned that the company has not done enough to secure future revenue drivers, given the failure of other experimental medicines.

Its next big hope is macitentan, a follow-on drug to Tracleer that could reach the market in 2013 and which some market forecasts suggest may also be a blockbuster, or a $1 billion-plus product.

Pivotal Phase III data on macitentan is due to be released at the end of 2011 or early in 2012, which may buy Clozel and Cawthorn some time.

"I think investors will give them the benefit of the doubt until we get key clinical data at the end of the year," one London-based analyst said. "If that data disappoints, then there will be a major change -- whether that be the sale of the company or a change in management."

(Additional reporting by Ben Hirschler; Editing by Jon Loades-Carter and Will Waterman)

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