Billionaire Carl Icahn builds 34% economic interest in Bausch Health

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(Reuters) -Billionaire Carl Icahn has built an economic interest covering about 34% of Bausch Health’s shares, according to a filing on Tuesday, days after the pharmaceutical firm adopted a “poison pill” to ward off hostile takeovers.

U.S.-listed shares of Bausch Health, the parent company of contact lens maker Bausch + Lomb, rose nearly 8% to $5.09 in early trading.

In addition to owning 9.4% of the company’s shares, Icahn has exposure to an additional 24.6%, or 90.72 million shares through cash-settled equity swap agreements, Bausch Health said.

Such financial contracts only allow an investor to benefit from stock movements without actually owning the shares. According to Icahn, the agreements do not give him control over voting on the additional shares.

Bausch Health, which has engaged financial advisors to help finance its large debt, last week adopted a shareholders’ rights plan, or a “poison pill”, to prevent investors from acquiring a more than 20% stake.

At the time, the company said the move was not in response to any specific proposals and it was not aware of any threatened take-over bids.

It reported total liabilities of nearly $27 billion at the end of last year.

In a supplement to its proxy filing, the company said Icahn refused to provide copies of the swap agreements to Bausch’s lawyers, but has said they were accumulated through more than 100 trades that took place between May 2021 and September 2023. 

The equity swap agreements mature on February 28, 2028 but can be terminated earlier in exchange for cash settlement, Icahn told Bausch’s lawyers.

The company’s chairman John Paulson also holds $50 million worth of bonds, which he plans to dispose off to eliminate “even the appearance of a conflict of interest,” Bausch disclosed in its filing.

(Reporting by Bhanvi Satija and Niket Nishant in Bengaluru; Editing by Shreya Biswas and Shinjini Ganguli)