(Reuters) – Two of Allergan Plc’s (AGN.N) shareholders – hedge funds Appaloosa Management and Senator Investment Group – on Tuesday asked the drugmaker’s board to split the role of chief executive officer and chairman, and end its acquisition strategy.
Allergan, which has a market value of about $51 billion, is saddled with a long-term debt of $26.6 billion as of March end – an outcome of a string of acquisitions.
The company’s shares have fallen about 33 percent in the past 12 months, up to Allergan’s close on Monday. The stock was up nearly 2 percent at $154.22 in late morning trading on Tuesday.
“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 shareholders said in a letter.
Allergan did not immediately respond to request for comment.
Earlier this year, the Dublin-based company under CEO Brent Saunders took up a strategic review and last week decided to sell its smaller businesses, the women’s health and infectious disease units.
However, some investors had hoped for a more dramatic outcome from the company’s strategic review.
“Like the rest of the investment community, we were underwhelmed by the Company’s half-hearted attempt to restore strategic momentum,” Tepper, along with Douglas Silverman, Managing Partner for Senator Investment Group, said in a letter.
The two hedge funds said after splitting the position of chairman-CEO, the company should hire a new person for one of the posts from outside the company.
The shareholders, who have a combined stake of nearly 2 percent, said they had previously sent similar letters to the drugmaker’s board in May and April.
In May, Appaloosa and two of billionaire investor David Tepper’s funds received Federal Trade Commission clearance for the billionaire to become an activist investor in Allergan.
Reporting by Manas Mishra in Bengaluru; Editing by Arun Koyyur
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