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Forest Laboratories Adopts Stockholder Rights Plan And Declares Dividend Distribution Of Preferred Share Purchase Rights

Forest Laboratories, Inc. (NYSE: FRX) today announced that its newly constituted Board of Directors adopted a stockholder rights plan and declared a dividend distribution of one Preferred Share Purchase Right on each outstanding share of Forest Laboratories common stock.

The Board adopted the rights plan in response to the recent rapid accumulation of a significant portion of Forest’s outstanding common stock. The rights plan is intended to protect the Company and its stockholders from efforts to obtain control of the Company that are inconsistent with the best interests of the Company and its stockholders. The rights plan also has an exception for an offer for all shares that is accepted by a majority of the Company’s shares and treats all shareholders equally.

Howard Solomon, Chairman and Chief Executive Officer of Forest, said: “After concluding a second proxy contest during which he repeatedly – and erroneously – disparaged Forest’s business model and growth prospects, Mr. Icahn increased his already significant position in Forest with rapid open market purchases. In light of these recent developments, the Board has adopted a stockholder rights plan that is designed to ensure that all of Forest Laboratories’ stockholders receive fair and equal treatment in the event of any proposed takeover of the Company, to guard against abusive tactics to gain control of Forest Laboratories without paying all stockholders a premium for that control, and to enable all Forest Laboratories stockholders to realize the long-term value of their investment in the Company.”

The Rights will expire in 12 months unless the rights plan is ratified by the Company’s stockholders.

The Rights will be exercisable only if a person or group acquires 12% (or 20% in the case of a 13G Institutional Investor, as defined in the rights plan) or more of Forest’s common stock. If a stockholder’s beneficial ownership of Forest’s common stock as of the time of this announcement of the rights plan and associated dividend declaration is at or above the threshold applicable to it (including through entry into certain derivative positions), that stockholder’s existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after such announcement the stockholder increases its ownership percentage by 0.001% or more. Each Right will entitle stockholders to buy one one-thousandth of a share of a new series of junior participating preferred stock at an exercise price of $100.

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