* Actelion facing fire from largest shareholder
* Elliott Advisors owns just over 6 pct of Actelion
* Actelion AGM on May 5 in Basel, Switzerland
By Katie Reid
ZURICH, April 29 Europe's largest biotech group
Actelion Ltd ATLN.VX faces a tough battle at its annual
general meeting to convince investors that it has the most
value-creating strategy after facing heavy criticism from its
Elliott Advisors has accused the $7.5 billion group of
squandering shareholder value through its high-risk strategy
and the New York-based fund has urged Actelion to consider
selling itself after a string of product setbacks.
The fight will come to a head next Thursday morning when
Actelion and Elliott square up in Basel in front of scores of
investors and both will be fencing hard to get their candidates
onto the Actelion board.
"Actelion will have to stay cool. Elliott will probably be
quite aggressive," said Helvea analyst Olav Zilian.
The hedge fund has a track record of activism and pushing
for radical change at a range of companies.
The dual is likely to go to the wire, but Actelion may just
win out after crucially securing the public support of two
large shareholders Rudolf Maag, who owns 4.2 percent, and
biotech investment fund BB Biotech, which has a 3.5 percent
"We believe it remains too close to call but currently the
balance is probably just in management's favour, based on
public comments by loyal shareholders to date," Jefferies
analyst Peter Welford said in a note.
Actelion has called on shareholders to re-elect chief
executive and Actelion founder Jean-Paul Clozel as well as Carl
Feldbaum and Juhani Anttila onto the board.
The Swiss biotech group also wants shareholders to back two
new candidates -- Jean-Pierre Garnier, a former GlaxoSmithKline
(GSK.L) chief, whom Actelion wants as chairman-designate, and
Robert Bertolini, a former finance chief of Schering-Plough.
Elliott, which now owns more than 6 percent of Actelion,
has said it would back these two new board candidates, but it
is also proposing its own slate of six drug industry and M&A
experts, including former Novartis NOVN.VX executive James
Shannon, who it wants to chair Actelion instead of current
chairman Robert Cawthorn.
"We are expecting a significantly higher turnout than
usual. The usual is between 30 and 35 percent of shareholders,"
Actelion spokesman Roland Haefeli said.
"The company is reasonably confident that the motions of
the board of directors will prevail," he said.
Georgeson, Elliott's proxy solicitor, expects 50 to 55
percent of Actelion shareholders to vote their shares at the
Actelion has also won support from Swiss investor group
Ethos, which can be influential in Switzerland, as well as from
Germany-based independent proxy voting service IVOX and proxy
firm Glass Lewis.
But U.S.-based shareholder advisory group ISS, which is
supporting some of Actelion's proposals, has said it is
advising shareholders to vote for the removal of Cawthorn,
boosting Elliott's cause.
According to an analysis by Georgeson, Elliott has
confirmations from 20 percent of shareholders and the likely
support of another 15 percent from subscribers of ISS, which
also advised shareholders to back three of Elliott's boardroom
"Based on our extensive discussions with major
institutional shareholders over the past few weeks, we know
they are concerned about the strategic direction of the company
and the need for a refresh of the board," a spokesman for
"Coupled with the fact that ISS supports seven of the
nominees and existing members that we are supporting, including
three that we nominated, and has asked shareholders to remove
five out of nine of existing Board members, including the
chairman, we are optimistic that there will be substantial
change at Actelion following the AGM which will benefit all
shareholders," the spokesman said.
Actelion has been seen as a bright light in the European
biotech industry thanks to its success with Traceler, a drug to
treat a rare heart and lung disease, but investors have been
unsettled by its failure to broaden its pipeline.
Helvea's Zilian also expects Actelion to prevail at the
shareholder meeting, although he believes it is likely Elliott
candidate Shannon will be elected and Actelion's Anttila will
fail to be re-elected.
Zilian said in the months following the AGM, the company
may want to shake up management and look for ways to deploy its
"They will have to prepare the rejuvenation of senior
management to also help make investors more confident. This
would be a new start. Actelion has to somehow make a cut and
move on," Zilian said.
"Pulmonary arterial hypertension will remain key, but they
have to grow out of this now. They should also be more
aggressive about spending cash and be more gutsy about going
for some M&A," Zilian said.
(Reporting by Katie Reid, editing by Matthew Lewis)