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March 22 (Reuters) – Allergan Plc agreed on Friday to separate its roles as president and chief executive, but only on its next change of direction, as the drug maker pushed back demands from activist hedge fund Appaloosa LP which an independent president could help the current director, Brent Saunders increases the downward price of his action.
Saunders, 49, has developed Allergan's current version as part of a series of contracts to consolidate several pharmaceutical companies in 2014 and has been running the company ever since.
He does not intend to withdraw, said a source close to Allergan.
The company said Friday that splitting roles, as Appaloosa asked, "could hurt the effectiveness of the board by creating a crisis of confidence in Mr. Saunders at a time when stability and effectiveness of leadership are essential. "
The manufacturer of Botox has announced the modification of its annual proxy statement filed with the Securities and Exchange Commission on Friday afternoon.
Appaloosa, led by billionaire hedge fund manager David Tepper, has been pushing for change at Allergan since last year, as Allergan's shares have weakened. Beyond the proposal to separate the roles of President and CEO, Appaloosa said the drug maker should consider a sale or a breakup.
A spokesman for Tepper did not immediately respond to a request for comment.
Allergan shares are down about 24% since October and are trading at less than half their historic high of more than $ 330 reached in 2015. On Friday, they fell 2.8% to 149.30. $.
The company recently disappointed investors because of worse-than-expected earnings forecasts for 2019 and the failure of treating rapastinal depression earlier this month.
The company began a review of its corporate strategy last year, but the result of this review is the sale of its relatively small infectious disease unit and its commitment to stay disciplined in spending.
Allergan stated in the regulatory filing that she had formed a board committee to oversee mergers, acquisitions, divestitures and other transactions. This committee will be led by Robert Hugin, former CEO of drug manufacturer Celgene Corp.
The company also said that director Catherine Klema would not run again. If the company replaces Klema, it will have appointed five new directors to its 12-member board since the beginning of last year. (Reports from Michael Erman in New York and Saumya Sibi Joseph in Bengaluru, additional reports from Svea Herbst-Bayliss in Boston and Greg Roumeliotis in New York, edited by Shailesh Kuber, Sriraj Kalluvila and G Crosse)
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