Biovail says it wins vote but founder to challenge

Wed Jun 25, 2008 5:18pm EDT
 
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By Scott Anderson

TORONTO (Reuters) - Biovail Corp shareholders overwhelmingly rejected a dissident slate of directors proposed by company founder Eugene Melnyk, opting to stick with the current board, the biotech company said on Wednesday.

Melnyk said he would challenge the result in court, arguing the meeting was improperly held because it lacked quorum, and in a surprise twist said he would launch his own drug start-up if the attempt to change Biovail's board fails.

Melnyk, who launched the company almost 20 years ago and held numerous posts before stepping down last year, decided to oppose the board after losing confidence in Biovail's corporate strategy and the board's abilities earlier this year.

Shares of Biovail, Canada's biggest publicly traded drug company, have dropped 45 percent in the past four years.

Melnyk told reporters he withdrew his shares after learning that about 10 percent of the shares voted in favor of the management slate had been withdrawn. This suggested to him a deepening shift in momentum towards his own proposal.

Without his votes, the meeting fell short of the obligatory 50 percent shareholder representation.

"This would present an opportunity for other shareholders to see the shift ... and possibly follow the footsteps of the shareholders who revoked their 6 million shares this morning," he said of his reasons for removing his shares.

Minutes before the vote, however, the company held a snap board meeting in which it changed the bylaws to reduce the required quorum to 25 percent.   Continued...