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ICN PHARMACEUTICALS, INC.
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(Name of Registrant as Specified in its Charter)
Iridian Asset Management LLC
and
Franklin Mutual Advisers, LLC
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The following is the text of a letter first mailed to ICN shareholders on
May 20, 2002.
IRIDIAN ASSET MANAGEMENT LLC FRANKLIN MUTUAL ADVISERS, LLC
276 Post Road West 51 John F. Kennedy Parkway
Westport, Connecticut Short Hills, New Jersey
May 17, 2002
We Urge You to Cast Your Vote
"FOR" the Shareholder Nominees on the enclosed WHITE Proxy Card Today
Dear Fellow ICN Shareholders:
Iridian Asset Management LLC and Franklin Mutual Advisers, LLC are
institutional investment managers and, along with you, shareholders of ICN
Pharmaceuticals. We own on behalf of our clients over 10% of the outstanding ICN
shares. As significant shareholders we believe our interests are aligned with
yours.
We believe:
o ICN's stock has NOT PERFORMED and remains chronically
undervalued;
o ICN has NOT PERFORMED on its promises to restructure; and
o ICN, under the continued leadership of Milan Panic, will NOT
PERFORM in the best interest of its shareholders.
We have joined together to nominate and support the election of three
highly-qualified directors, Richard H. Koppes, Robert W. O'Leary and Randy H.
Thurman, at ICN's annual meeting of shareholders which will be held on May 29,
2002.
We believe that the election of three more shareholder-nominated
directors is needed to deliver an unmistakable mandate for real change at ICN
and finally unlock ICN's unrealized value.
LET'S TAKE A CLOSER LOOK AT ICN'S
CLAIMS OF "PERFORMANCE"
ICN tells us it "delivers shareholder value."
BUT THEY DON'T DELIVER
o Milan Panic said, "We are grossly undervalued...one third of the
valuation of our competing companies."
At Salomon Smith Barney Specialty
Pharmaceuticals Conference March 7, 2002
ICN Stock Price March 7, 2002: $29.55
ICN Stock Price May 13, 2002: $26.77
o ICN shares now trade more than 45% below their five-year high and
they trade at 2.4x trailing 12-month sales vs. 4.1x for its peer
group, a discount of over 40%.
o ICN went forward with the Ribapharm IPO on April 12, 2002 - the
week the AMEX Biotechnology Index (BTK) hit its then lowest level
for the year - at well below its expected range of $13-15.
o ICN's own investment banker, UBS Warburg, wrote in a May 8, 2002
research report that it believes a spin-off of Ribapharm would
remove "the ICN taint" from Ribapharm.
PROMISES ARE NOT PROGRESS
ICN tells us that it has "delivered on its promises" and its
restructuring is "on track."
BUT THEY HAVEN'T DELIVERED
o A prospectus for the promised offering of ICN International was
filed over thirteen months ago and it has simply not been heard
of since. In fact, ICN abandoned a promised spin-off of ICN
International a year ago and now says an ICN International
restructuring is "planned" only for early 2003 - conveniently
after this year's Annual Meeting.
o ICN promised in October 2000 to file a Ribapharm spin-off tax
ruling request "as soon as possible" but did not do it for
seventeen months until this March -conveniently within four days
after learning of the formation of our shareholder group and the
threat of a new proxy challenge.
o The promised Ribapharm IPO took close to two years to accomplish
- "the fifth-longest wait for an initial public offering in
better than five years." After having repeatedly said that it
would not sell Ribapharm shares unless it could achieve a $3
billion market capitalization (another promise?), ICN went
forward with the sale at $10 - far below the expected price of
$13 to $15 a share - producing only a $1.6 billion market value.
o The Ribapharm spin-off is now "anticipated later in 2002." Yet
another promise. But repeating a promise over and over again
simply isn't "progress."
o Do not forget - Ribapharm and ICN International remain completely
under the control of ICN still led by Milan Panic. Do not forget
- ICN promised that Ribapharm would have a truly independent
board of directors. Is the spirit of this promise being honored
in the make-up of Ribapharm's existing board of directors? How
much influence will ICN's current senior management have at an
"independent" Ribapharm?
ICN'S UNIQUE CONCEPT OF
"DEPENDABLE CORPORATE GOVERNANCE"
ICN tells us "ICN has had a long history of dependable corporate
governance."
BUT WE DISAGREE - YOU BE THE JUDGE -
o Fortune magazine in 2001 selected ICN as one of "The Dirty
Half-Dozen: America's Worst Boards." Among its comments - "The
Board is an absolute joke, turning a blind eye to Panic's
shenanigans . . . Several of the so-called independent directors,
including members of the compensation committee, have taken
consulting fees . . . There is no nominating committee. Panic
handpicks all directors."
o Institutional Shareholder Services said only last year:
"[S]hareholders cannot ignore ICN's checkered governance
history." "A persistent complaint of investors has been that
[Milan Panic] exercises too much control over the company and
that the board has not aggressively exercised its right to
oversee Mr. Panic's actions."
o ICN's Corporate Governance Committee did not meet a single time
in the five years between 1997 and 2001. Birch Bayh, one of ICN's
nominees this year, was a member of ICN's Corporate Governance
Committee during this entire five-year period.
o ICN's "Nominating" Committee, created only in March 2002 within
five days of learning of the threat that our newly formed
shareholder group might mount a proxy contest, does not nominate,
does not make recommendations and does not identify potential
Board members. The "Nominating" Committee's only role is to
review the qualifications of potential nominees, with "direct
input" from the Chairman and CEO.
o Who "picked" ICN's two newest directors - Roderick Hills and
Abraham Cohen - both appointed rather than elected to the Board?
One thing we know for certain - it wasn't the ICN "Nominating"
Committee. How much "direct input" did ICN's Chairman and CEO
have in these selections?
o ICN's Compensation Committee recommended the payment of a "cash
bonus pool" of $50 million to ICN's directors and executive
officers, of which more than $33 million has already been paid to
Milan Panic. The same Compensation Committee decided, without
submitting the matter to ICN's Board, to amend nine-year-old
executive employment agreements to add a "gross up provision" to
pay for "golden parachute" taxes on any "change in control"
payments triggered if another shareholder-nominated slate is
elected.
ICN tells us that it is "updating and revising" its corporate
governance policies.
BUT WILL YOU NOW RELY ON ICN AND MILAN PANIC TO DELIVER?
o Do you trust Mr. Panic's latest, eleventh hour "commitment" to
"an orderly management succession plan" - to be formulated by a
committee of which he is a member? We remember other
long-standing "commitments" by ICN's Board. Promises are easy,
real performance on the other hand . . .
o We believe you will continue to share our profound skepticism at
the idea that ICN and its long-time Chairman, facing a proxy
contest for the second year in a row and the prospect of a
majority of shareholder-nominated directors, have suddenly and
conveniently embraced the gospel of good governance.
OUR NOMINEES
EXPERIENCE AND INDEPENDENCE
ICN tells us that the "dissidents" have no experience managing
a global pharmaceutical company.
BUT DON'T BE MISLED. The "dissidents" are not running for seats on
ICN's Board. Randy Thurman, Rob O'Leary and Richard Koppes are, and
they are clearly qualified.
o Randy H. Thurman has spent eighteen years as a senior executive
in the pharmaceutical and biotech industries. His experience
includes more than eight years as the President and Chief
Executive Officer of Rhone Poulenc Rorer Pharmaceuticals, Inc.
and four years as the Chairman of the Board and Chief Executive
Officer of Corning Life Sciences Inc. He is currently the
Chairman, President and Chief Executive Officer of Viasys
Healthcare Inc. He is a director of CLOSURE Medical Corporation
(and a member of its Audit Committee and Compensation Committees)
and the former Chairman of the Board of Enzon, Inc.
o Robert O'Leary has spent approximately twenty-eight years as a
senior executive in the healthcare industry. His experience
includes more than five years serving as the Chairman or Chief
Executive Officer of Premier Inc. (and its predecessor company
American Healthcare Systems, Inc.) and more than three years as
the Chairman and Chief Executive Officer of American Medical
International, Inc. Mr. O'Leary is currently the Chairman and
Chief Executive Officer of the Sagamore Group and is a director
of Viasys Healthcare Inc. (where he chairs the Compensation
Committee), Smiths Group plc (where he is a member of the Audit
and the Nominations and Remuneration Committees) and Thermo
Electron Corporation (where he serves on the Human Resources
Committee and chairs the Nominating and Corporate Governance
Committee).
o Richard H. Koppes is the former general counsel of California
Public Employees Retirement System (CalPERS) and is nationally
recognized as a pioneer in the field of corporate governance. Mr.
Koppes is a director of Apria Healthcare Group, Inc. (where he is
co-Chairman of the Corporate Governance Committee and a member of
the Compensation Committee).
MILAN PANIC AND ICN MANAGEMENT -
A FAILURE TO PERFORM
In our view ICN, under the pervasive influence of Milan Panic, has NOT
PERFORMED and CANNOT BE COUNTED ON TO PERFORM in the best interest of
its shareholders.
ENOUGH IS ENOUGH
We believe the full value of ICN will not be realized unless ICN is
relieved of the burden of Milan Panic's continuing role and influence
and shareholders develop confidence in the integrity of ICN's
management and Board.
The election of our three nominees will deliver a resounding and
unmistakable mandate for real change at ICN and will create a Board
empowered to deliver on that mandate.
Your Vote is IMPORTANT
We urge you to Cast Your Vote
"FOR" the Shareholder Nominees on the enclosed WHITE Proxy Card Today.
IRIDIAN ASSET MANAGEMENT LLC FRANKLIN MUTUAL ADVISERS, LLC
/s/ David Cohen /s/ David Winters
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David L. Cohen David Winters
Principal President
If you have any questions or need help voting your shares, please contact:
[Mackenzie Partners, Inc. logo]
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, NY 10016
email: proxy@mackenziepartners.com
Call Collect: (212) 929-5500
or Toll Free: (800) 322-2885
Facsimile: (212) 929-0308