Bausch Health Reveals Carl Icahn's 34% Interest Amid 'Poison Pill' Defense

Bausch Health Companies Inc. has disclosed that activist investor Carl Icahn holds a substantial 34% economic interest in the company, a revelation that comes on the heels of the pharmaceutical firm's implementation of a shareholder rights plan, commonly known as a "poison pill" defense.

Icahn's Significant Stake

The company's recent filing with the Securities and Exchange Commission (SEC) revealed that Icahn and his affiliates have exposure to 90.72 million shares through equity swap agreements, representing 24.6% of Bausch Health's common shares. This is in addition to Icahn's previously disclosed 9.4% stake, bringing his total interest to approximately 34%.

The size of Icahn's position came to light following an investigation ordered by Bausch Health's board of directors. The review, conducted by independent counsel Sidley Austin, found that Icahn's team refused to provide copies of the equity swap agreements but confirmed their cumulative exposure.

Defensive Measures and Corporate Strategy

In response to potential takeover threats, Bausch Health recently implemented a shareholder rights plan. This "poison pill" strategy is designed to prevent any person or group from acquiring beneficial ownership of 20% or more of the company's outstanding common shares without complying with specific exemptions.

The company stated that the plan aims to protect against "creeping" takeover bids that could potentially benefit certain shareholders at the expense of others. Bausch Health emphasized that the implementation of the poison pill was not in response to any specific takeover proposal, and the board was unaware of any pending or threatened bids at the time.

Financial Implications and Market Response

The disclosure of Icahn's significant stake had an immediate impact on Bausch Health's stock price, which surged 9.96% following the news. The company reported revenues of $4.83 billion in 2024, excluding the $4.79 billion generated by its recently spun-off eye care segment, Bausch + Lomb.

In a separate development, John Paulson, the chairman of Bausch Health's board, announced his intention to divest $50 million worth of company bonds he had purchased before rejoining the board in 2022. This move is aimed at eliminating any potential conflicts of interest, despite the company's determination that the initial purchase did not require disclosure.