Icahn's moves on Amylin watched closely; Validus bid for IPC a long shot, analyst says

By Cristal Cody

Tupelo, Miss., April 15 - On Wednesday, activist investor Carl Icahn continued to push his strategy for Amylin Pharmaceuticals, Inc., and the market is watching closely, an analyst told Prospect News.

Also on Wednesday, the U.S. Federal Trade Commission approved Suncor Energy Inc.'s $15.5 billion takeover of Petro-Canada.

Petro-Canada shareholders will receive 1.28 shares of the combined company for each share of Petro-Canada after the Calgary, Alta.-based oil and gas companies merge.

Suncor shares rose 2 cents, or 0.08%, to close Wednesday at $25.18, while Petro-Canada's stock added 24 cents, or 0.78%, to close at $31.16.

The commission also cleared specialty insurer Max Capital Group Ltd.'s merger with reinsurance company IPC Holdings, Ltd., which is fighting a $1.68 billion stock bid by Validus Holdings, Ltd.

Validus' offer at this point is a long shot, an analyst told Prospect News.

Meanwhile on Wall Street, stocks rallied strongly in the last half-hour of trading on Wednesday, said Bill O'Grady, chief market strategist with Confluence Investment Management LLC.

"The Beige Book, as would be expected, was mostly negative on the economy but did signal that the pace of deterioration has slowed," he said. "Given that the financial markets have probably discounted further weakness, a slowdown in the declines is good news."

The Dow Jones Industrial Average gained 109.44 points, or 1.38%, to close at 8,029.62 on Wednesday.

The Standard & Poor's 500 index rose 10.56 points, or 1.25%, to 852.06, and the Nasdaq Composite index added 1.08 points, or 0.07%, to end at 1,626.80.

Cook vs. Icahn, Eastbourne

Icahn wants to replace five of Amylin's 12 board members, while Amylin shareholder Eastbourne Capital Management, LLC is also seeking to replace five directors at the annual shareholders meeting on May 27.

Icahn called for the resignation of Amylin chairman Joseph Cook in a letter he sent Wednesday.

"Having two major stockholders both independently decide to run a proxy fight against the same board is rare - it dramatically shows how stockholders have lost faith in the Amylin's board's ability to run the company," Icahn said in the letter sent to Cook.

Shares of the San Diego-based biopharmaceutical company are down more than 60% over the past year, and sales of its twice-daily injectable diabetes treatment, Byetta, also are on the decline.

Adam Cutler, a senior biotechnology analyst with Canaccord Adams Inc., told Prospect News that Icahn and Eastbourne probably aren't the only Amylin shareholders tired of the status quo.

"People are paying close attention to what both Icahn and Eastbourne are doing in trying to call for changes at Amylin," he said. "Typically Icahn's pattern of calling for changes [leads] to putting the company up for sale. But I'm skeptical there will be an acquirer in the near term."

No bidders would probably "step up" until after Amylin receives approval from the Food and Drug Administration for its updated version of the diabetes drug, and approval is not expected until 2010, Cutler said.

Amylin shares rose 51 cents, or 5.10%, to close at $10.51 on Wednesday.

Validus bid a long shot

IPC and Max Capital, both based in Bermuda, announced the $912 million stock deal on March 2, and IPC has asked shareholders to support the combination.

Validus, a Bermuda-based reinsurance and insurance provider, has said it intends to take its March 31 offer directly to shareholders after IPC rejected the deal.

Validus has offered to exchange one IPC share for 1.2037 Validus shares.

If Validus would "sweeten the offer, it would help. But it doesn't look like they want to," Doug Mewhirter, an equity research associate with RBC Capital Markets Corp., told Prospect News. "From where I sit, Validus is a bit of a long shot right now."

Max Capital's stock gained 53 cents, or 3.20%, to close at $17.08 on Wednesday, while shares of IPC rose 59 cents, or 2.27%, to close at $26.58.

Shares of Validus closed up 40 cents, or 1.77%, at $23.05.

Mentioned in this article:

Amylin Pharmaceuticals, Inc. Nasdaq: AMLN

IPC Holdings, Ltd. Nasdaq: IPCR

Max Capital Group Ltd. Nasdaq: MXGL

Petro-Canada NYSE: PCZ

Suncor Energy Inc. NYSE: SU

Validus Holdings, Ltd. NYSE: VR

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