Feb 4 Following is the text of a letter sent to
the board of directors of Actelion ATLN.VX, the Swiss
biotechnology company, by Elliott Advisors, the hedge fund that
is one of its biggest shareholders. For a Reuters story on
Elliott's demands and Actelion's response, click [ID:nLDE7130KD]
Dear Members of the Board of Directors,
I write to you on behalf of Elliott Advisors (UK) Ltd. and
its affiliates, one of your largest shareholders. We
collectively own, or have an interest economically equivalent
to, almost 6% of the share capital of Actelion Ltd (the
"Company"). Elliott, founded in 1977, is a multi-strategy global
investment firm with $17 billion in assets under management
focused on employing detailed research to address complex
investment situations and unlock shareholder value.
In recent months we reached out privately to most of you
with our concerns about Actelion's current strategic direction
and corporate governance.
Unfortunately, little apparent progress has been made to
address our serious concerns about how best to unlock the
substantial value we believe is inherent in the Company.
Regretfully, this leaves us no choice but to air our concerns
publicly in the hope of stimulating a wider debate about the
optimum future of the business in the interests of all
At present, as we see it, shareholders are being given no
choice regarding the future direction and management of
Actelion. There has been widespread speculation that the
business has received approaches from other pharmaceutical and
biotechnology groups, and yet the Board and management
apparently refuse to entertain such an approach or even to give
shareholders any details of such approaches or their reasons
for rejecting them.
Shareholders are consequently not being given the choice to
decide for themselves whether Actelion's current independent
strategy is the best way forward or whether the group could
release greater long-term value by pursuing a sale or change of
As a result, we have been obliged to place a number of items
on the agenda at the Company's forthcoming General Meeting on
5th May 2011, as proposed in our letter of 21st December 2010
and which our shareholding permits us to do.
First, we are calling for Dr. Jean-Paul Clozel to step down
from the Board of Directors with immediate effect. We believe
his public statements and apparent campaign to keep the Company
independent are wholly inconsistent with his position as a Board
Member and the fiduciary requirements of that role, i.e. the
protection of shareholders' best interests.
While we have great respect for Dr. Clozel and his work and
are happy for him to remain as CEO, we feel that the Actelion's
management and the supervisory duties of the Board urgently need
to be separated in the interest of effective corporate
governance. It is unusual in Switzerland for CEOs to be part of
the Board. This only occurs in a few cases, predominantly at
companies dominated by a family shareholder. At two-thirds of
the SMI companies, the CEO is not a Member of the Board.
Second, we are calling for Mr. Robert Cawthorn to relinquish
his role as Chairman of the Board and step down from the Board
of Directors with immediate effect. The Chairman's continued
support of Dr. Clozel's actions conflicts with shareholders'
interests. We feel that Mr. Cawthorn has thereby compromised his
role as an independent Chairman and that he should therefore
step down. We call on the Board of Actelion to select a new
independent chairman forthwith.
Third, in light of the many rumoured approaches by motivated
acquirers for the Company, we urge the Board to form a Strategic
Committee to explore its strategic options. In our view, it is
crucial that an independent Board Member with a proven
track record in this field leads this committee. We firmly
believe that, if a fair process is allowed and facilitated by
the Board of Directors, a number of these potential acquirers
will be in a position to offer shareholders a purchase price for
their shares well in excess of the Company's standalone value.
The current share price of Actelion is CHF 52, but respected
analysts have suggested that a sale of the business could result
in a value as high as CHF 70 per share. For example, research
from UBS on 26th November 2010 ascribed a value of "at least"
CHF 66 per share for Actelion in a sale. There appears to be no
reasonable prospect of the Company achieving that value as a
standalone business in the foreseeable future given that
Tracleer is now only five years from the expiration of its
patents, and the value of the Company's development pipeline is
limited since most of its compounds are in early stage trials.
Finally, we would like to inform the Board that we intend to
make public the contents of this letter and the agenda items for
the forthcoming General Meeting, with the intention of
stimulating a constructive debate about the best way forward for
Elliott, as a significant shareholder in Actelion, believes
strongly that all shareholders should have a choice in deciding
the future of the Company, and recognises that a sale of the
Company to a strategic investor at the appropriate price could
unlock substantial value for all owners of the Company.
We are committed to a long-term effort to work closely with
the Board of Directors to realise substantial shareholder value
and protect the interests of the Company's owners and would be
happy to meet you or your representatives at any stage to
discuss the way forward.
Elliott Advisors (UK) Ltd.