Allergan Shareholders Urge Company to Overhaul Management Structure; Split Role of Chairman and CEO

In a letter sent to Allergan’s board of directors on Tuesday, two company shareholders, Appaloosa Management and Senator Investment Group, called on the drugmaker to divide the roles of chief executive officer and chairman, currently held by Brent Saunders. The investors also urged Allergan, among other things, to identify a candidate from outside the company to fill one of the roles and remarked “we were underwhelmed by the company’s half-hearted attempt to restore strategic momentum.”

Last month, Allergan unveiled plans to divest its women’s health and infectious disease businesses after completing a strategic review. Mr. Saunders had previously cautioned that the company would be unlikely to pursue transformational deals under the review.

On Tuesday, the investors stated “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.” The news comes after Appaloosa’s David Tepper recently received clearance from the US Federal Trade Commission to act as an activist investor in the drugmaker.

The investors also indicated that Allergan should replace at least two additional directors on the board members, in addition to the three new members appointed over the last 16 months, as well as upgrade management for key operating units. The shareholders further noted that similar communication had been provided to Allergan in the last two months.

Allergan, which said it welcomes “input from all our shareholders, and take into account their views,” commented “our board and management are committed to creating a world class biopharmaceutical and aesthetics business and driving shareholder returns.” The drugmaker continued “our number one priority continues to be executing on operational excellence and delivering strong results to drive long term shareholder value.”