After enacting a “poison pill” defense to protect itself from unwanted potential buyers, Bausch Health has spotted a major shark circling its waters.
Tuesday, in a supplement to its annual proxy statement, Bausch flagged a 34% overall interest held by billionaire activist investor Carl Icahn. Last month, Bausch's board of directors ordered the company's general counsel to look into Icahn's overall position in the company as well as certain bonds held by board chairman John Paulson, according to the filing.
During the review, which was conducted by an independent counsel in Sidley Austin, Icahn and his affiliates refused to show copies of equity swap agreements, according to the filing. But they did admit to their cumulative exposure to 90.72 million company shares through equity swap agreements.
The 90.72 million shares represent 24.6% of the company’s common shares and add to Icahn's previously disclosed beneficially owned 34.72 million shares, which total 9.4% of the company's outstanding shares, Reuters and The Wall Street Journal report.
Icahn's interest is notable given the billionaire businessman’s reputation as a “corporate raider.” He’s previously picked up sizable stakes in Bristol Myers Squibb, Allergan, Amgen and Amylin, to name a few companies in the biopharma space. Bausch, meanwhile, has its defenses ready in the case of a hostile takeover.
The company recently revealed in a filing that it implemented a shareholder rights plan, also known as a “poison pill” defense. The plan is meant to prevent a person or group from taking beneficial ownership of 20% or more of the company’s outstanding common shares without complying with “permitted exemptions,” Bausch said in its supplemental proxy filing, and specifically protects against “creeping” takeover bids that may “benefit certain shareholders to the detriment of others.”
By using the poison pill strategy, the company believes it has the opportunity to identify “value-enhancing alternatives” that would benefit all shareholders. At the time of implementing the plan on April 14, the company clarified that the shareholder rights plan was not in response to any “specific proposal or intention to acquire control of the company,” and Bausch’s board was not aware of “any pending or threatened take-over bid.”
The company’s stock price jumped 9.96% on Tuesday on the back of the Ichan news. Bausch Health collected $4.83 billion in 2024 revenues, which doesn’t include the $4.79 billion that its recently spun-off eye care segment, Bausch + Lomb, raked in.
Paulson, meanwhile, bought $50 million worth of Bausch Health bonds in the open market before he rejoined the board in 2022, according to the Tuesday filing. While the company found that his purchase wasn’t required to be disclosed, Paulson asked that Bausch update the proxy statement to make it known that he will dispose of the debt securities in order to get rid of “even the appearance of a conflict of interest.”