Notorious activist investor Carl Icahn buys small stake in Allergan

Activist investor Carl Icahn has taken a small stake in Allergan, joining a growing list of weighty shareholders who could influence the company’s strategy at a time when investors are pushing for changes.

With competition edging in on its two top sellers — Botox and Restasis — Allergan $AGN has struggled to appease its shareholders with a plan of action. The company’s effort to protect its Restasis IP through the controversial — and ultimately failed — tribal licensing strategy didn’t help matters.

Brent Saunders

We don’t know the size of Icahn’s stake, or what his plans might be for the company. But we do know Icahn has been rather friendly in the past to Allergan CEO Brent Saunders, pushing for him in 2013 to become CEO of Forest Laboratories (which through mergers and acquisitions became Allergan).

Top shareholders are looking for activist investors to make some changes at the Dublin-based drugmaker, Bloomberg, which first reported the news, reports, citing unnamed sources “familiar with the matter.” In addition to Icahn, activist investor Alex Denner at Sarissa Capital also has a stake in Allergan. Denner is known for being Icahn’s former protégé and for his history of spurring acquisitions at companies in which he invests. His stake in Allergan is notable even though its small, considering Sarissa’s fairly recent stake in Ironwood, Allergan’s partner on IBS and constipation drug Linzess.

David Tepper

Plus, Icahn’s investment folllows David Tepper’s 1% stake at Allergan. Tepper, founder and president of Appaloosa, just made headlines this Tuesday for his letter to Allergan pushing the drugmaker to overhaul its management.

“It is time for Allergan’s management to concentrate on running a world class pharmaceutical and aesthetics business and forego thoughts of, or the exhilaration from, an ambitious acquisition strategy,” Tepper wrote in a letter to Allergan’s board.

Among Tepper’s suggestions was splitting up the roles of CEO and chairman, both of which are occupied by Saunders at the moment.

Icahn, who had invested in Allergan in the past, believes the company’s stock is undervalued, the sources said, asking not to be identified because the matter is confidential.

Allergan recently did a strategic review of the company, coming out after with plans to sell its women’s health and infectious disease units to focus on medical aesthetics, CNS, eye care and GI — areas in which the company believes it’s competitive to rivals.

Allergan issued this statement in response to questions about Icahn’s stake:

“Allergan welcomes all investments in our company. We maintain an active dialogue with our shareholders and value their constructive input and ideas on delivering long-term value.”

The company’s stock is up 2% on the news.

Image: Carl Icahn. GETTY IMAGES

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