(Reuters) - Billionaire hedge fund manager David Tepper stepped up pressure on Allergan (NYSE:AGN) Plc, saying on Tuesday the drugmaker should consider selling itself if management is unable to turn around recent lagging performance.
Tepper's hedge fund Appaloosa LP wrote to Allergan's board, just hours after the Botox maker announced it added a former industry executive to its board but would split the roles of chairman and chief executive only when the person who now holds the positions is replaced.
"While we appreciate the input of Appaloosa as we do all of our shareholders, we strongly disagree that an immediate separation of the CEO and Chair positions is warranted," Allergan's board said in a statement.
Appaloosa has since last year pressed Allergan to separate the roles — currently held by Brent Saunders, who joined the company in 2014 — and recruit an outsider to oversee its board.
"If in fact (Allergan's) Board is unable or unwilling to hold management accountable for its shortcomings or find a suitable replacement, it is your fiduciary obligation to explore other options, including a merger or sale of the Company," Tepper said in the letter.
Splitting the chairman and CEO roles has become a favorite call for some investors who feel it would help companies be run better.
Earlier this month Appaloosa argued that by adding an independent chairman, Saunders might receive the help he needs to improve returns.
Allergan, however, said on Tuesday implementing Appaloosa's recommendations would be "highly disruptive" to the company's operations and impact Saunders' ability to continue to execute its current strategy.
Appaloosa, which oversees about $12 billion, cut its stake in Allergan by some 42 percent to nearly 1.2 million shares at the end of December, regulatory filings showed last week.
Allergan's shares have been lagging those of its industry peers — they have fallen 15 percent over the past year — since it dropped plans to sell some businesses, gave a disappointing revenue outlook for 2019 and as it faces rising competition for several important drugs.
The company earlier on Tuesday named Robert Hugin, a former CEO of U.S. drugmaker Celgene (NASDAQ:CELG), as a director, saying the appointment reflected its commitment to "active board refreshment."