In War for Amylin, Icahn and Eastbourne Win a Battle; "Poison Pill" Remains

(MoneyWatch)  Carl Icahn and Eastbourne Capital seem to have won a small battle in their war for Amylin. The company's board has decided not* to delay commiting financial suicide in the face of their insurgent board election bid.

The board said today will "approve" the rival slates of directors proposed by Eastbourne and Icahn. If the slates win it willthus avoiding the trigger of a "poison pill" provision in the company's debt agreements that would make $900 million in loans come due immediately.

The approval isn't an endorsement of Icahn and Eastbourne's slates. It merely allows the candidates to be considered by shareholders.

The board said:

The Board continues to recommend against the election of the Icahn and Eastbourne nominees and "approval" for purposes of the Indenture should not be construed as support by the Board for the election of those individuals.

In explaining why it did so, the company noted that it had partially settled an Eastbourne-backed lawsuit over the issue:

As soon as it became clear that the Company could be engaged in proxy contests that could trigger these [debt] provisions, Amylin immediately began to seek clarification ... As the litigation progressed, it became clear that the positions of the Company and the Plaintiff on this fundamental point did not substantially diverge and therefore that partial resolution of this litigation was in the interests of both the Company and its stockholders.

This, of course, is humbug. There's only one reason to adopt a poison pill regarding your own debt, and that's to stop people like Icahn and Eastbourne from taking over your company. On this issue, Amylin has blinked first.

In addition: Icahn sent an impolite note to Amylin's board calling for the resignation of chairman Joseph Cook. His letter joins an earlier letter by former director and founder Howard Greene, who sent a letter saying the same thing a couple of days ago. Amylin made this po-faced response to the letter:

Amylin has a long-standing practice of maintaining an open dialogue with our shareholders. We have engaged in discussions with both Mr. Icahn and Eastbourne Capital Management, L.L.C. ("Eastbourne"), and welcome the opportunity to meet with them again, either separately or together. Eastbourne had previously indicated that it would only be willing to meet with Amylin if the Company agreed to substantial preconditions involving the composition of the Board. While we remain open to constructive discussions, we would prefer to do so without preconditions. We look forward to continuing our dialogue with all of our shareholders.

* Correction: The item originally stated that the two sides had settled their suit and the poison pill was revoked. The suit was only partially settled to allow Icahn and Eastbourne's slates to be considered; the poison pill debt deal in the event of a change of control of the board remains a live issue in the suit. Apologies for the error.

• See previous coverage of Amylin:
• Amylin Founder Resigns, Suggests Chairman Follow; Icahn and Eastbourne Likely Delighted
• Inside Amylin's Anti-Icahn Suicide Pact
• Amylin Battle Heats Up as Eastbourne Capital Touts Rival Directors' Slate to Icahn's
• Icahn Moves on Amylin; Will Lilly Step Up?
• Behind the Byetta Crisis: Is This Drug Really All That and a Bag of (Fat-Free) Chips?