Pennant Capital says Axcan Pharma owes shareholders more information on deal with TPG Capital

By Lisa Kerner

Charlotte, N.C., Dec. 5 - Axcan Pharma Inc. investor Pennant Capital Management, LLC urged the company's board to "fully disclose the details of the process and evaluation" regarding the proposed transaction with TPG Capital.

Pennant, in a Dec. 4 letter to the board, said it would like to assess the fairness of the transaction and called on board members to provide the information as part of their fiduciary duty. The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

On Nov. 29, Axcan said it agreed to be acquired by TPG Capital and its affiliates in an all-cash transaction valued at some $1.3 billion, or $23.35 per common share. The per-share offer price is a 28% premium over the average trading price of Axcan's common shares on Nov. 28, according to a prior company news release.

However, Pennant said a more relevant time period to consider is the last 90 days when negotiations with TPG likely took place. During that time, the stock price averaged $19.68 with a 52-week high closing at $21.29, according to the shareholder's letter.

Pennant said that while it supports a sale of the company, it believes the valuation indicated is "inadequate considering the strong cash flows of the business coupled with significant net cash on the balance sheet."

In order for Pennant to support any proposed transaction, Axcan must provide shareholders with "full details of the process undertaken to realize the highest value for the company, the ongoing role, compensation and ownership of management and directors in the new entity and the fairness opinion."

Pennant owns 5,508,000 shares, or 9.95%, of the Mont-Saint-Hilaire, Quebec, specialty pharmaceutical company's outstanding stock.

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