ZURICH/LONDON, Feb 4 (Reuters) - Swiss biotech group Actelion has rejected a call from hedge fund shareholder Elliott Advisors to explore a possible sale, and for its chairman and chief executive to resign from the board.
'The Board unanimously supports Dr. Jean-Paul Clozel, both as the company's CEO and as executive board member, as well as Rob Cawthorn as chairman,' Vice-Chairman Joe Scodari said in a letter on behalf of Actelion's board.
The board backed the firm's current strategy based on independence and selected partnerships, saying a sale would deprive shareholders of upside inherent in the group's pipeline.
'Finally, we would like to clarify that the Board is well aware of its obligations to act in the best interest of the company and its shareholders, and has not received any offer to acquire the company,' Scodari said in the letter.
Actelion's shares closed 4 percent higher after it emerged Elliott had written to the company, which said Clozel's attitude to a potential sale was not in shareholders' interests.
Actelion would be worth about around 6.7 billion Swiss francs ($7.10 billion).
'We believe his public statements and apparent campaign to keep the company independent are wholly inconsistent with his position as a board member and the fiduciary requirements of that role, i.e. the protection of shareholders' best interests,' Elliott wrote in the letter to Actelion.
Shares in Actelion have traded in a tight range since mid-November, when Clozel sought to quash takeover speculation, saying staying independence was the best way to ensure value for the shareholders.
Reuters obtained a copy of the letter, addressed to Actelion directors and sent from the London office of the New York-based hedge fund on Thursday. Elliott's move was earlier reported by the Financial Times.
The letter demanded chairman Robert Cawthorn and chief executive Clozel step down from the board.
For a full text copy of the letter, click
ACTIVIST SHAREHOLDER
Elliott said management was not addressing concerns about Actelion's strategic direction and said the share price was too low. The hedge fund said it had a stake of nearly 6 percent in Actelion, up from just over 3 percent before Christmas.
Elliott, a $17 billion hedge fund based in New York, was founded by Paul Singer in 1977 and launched with just $1.3 million. Singer's son, Gordon, runs the firm's London office.
Elliott often takes on the role of an activist shareholder, and last year sought to buy business software company Novell after building an 8.5 percent stake in the company .
Actelion and British partner GlaxoSmithKline last week dropped development of insomnia drug almorexant, a move some analysts said made Actelion more attractive as a takeout target, as the group no longer had to spend money on a project they said had a relatively low chance of success.
Rumours of a possible buyout buffeted the company's share price through the autumn, with the favourite mooted suitor being U.S. biotech giant Amgen and cash rich pharma companies including Bayer also in the mix.
No offer for the company has emerged but many analysts think a sale to a large drugmaker hungry to add new products would make sense. Takeout value estimates have been between $65-72.
'We believe that a takeover would release substantial value and we continue to believe that the risk-reward balance in Actelion is very attractive,' said Kepler Research analyst Tero Weckroth.
Some analysts worried this latest development could distract management and the board from running the business.
'For the company's operating business this (the Elliott proposal) is negative, but it is positive for the short-term share price development,' said ZKB analyst Sybille Frick Bischofsberger.
'Speculation has been driving the share price, but if bids don't materialise then in the longer term the share price could slip back to the operating value,' she said.
(Additional reporting by Paul Arnold, Silke Koltrowitz and Sven Egenter; Editing by Dan Lalor, Ben Hirschler and Jane Merriman) ($1=.9435 Swiss Franc) Keywords: ACTELION/ (Zurich Newsroom +41 58 306 7336, fax +41 44 251 0476, zurich.newsroom@news.reuters.com) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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