IBJNews

Poison pills remain as Lilly shareholder vote falls short

Back to TopCommentsE-mailPrintBookmark and Share

Shareholders of Eli Lilly and Co. failed once again Monday morning to remove the drugmaker’s tough poison-pill provision against unwanted buyers.

The proposal garnered support from owners of 62.4 percent of Lilly's shares. To pass, the proposal needed approval from the owners of 80 percent of Lilly’s shares. The Indianapolis-based drugmaker's annual meeting of shareholders took place Monday morning.

That means Lilly’s corporate bylaws still contain an 80-percent approval threshold for hostile takeover bids, even after the company’s board has recommended removing the 27-year-old policy in each of the past three years.

The proposal that failed Monday would have required just a bare majority of shareholder votes to approve key moves commonly used in hostile takeovers.

In the past two years, the same proposal received 74 percent and 73 percent of all shares, respectively.

The supermajority vote requirement dates from the 1980s, the heyday of “corporate raiders” making unsolicited bids to buy public companies. Lilly’s board, which has been fiercely independent during multiple waves of consolidation in the pharmaceutical industry, began to support the removal of the high threshold in 2010.

That decision followed three straight years in which a majority of Lilly shareholders expressed support for removing the supermajority voting requirements.

In Lilly’s proxy statement filed March 5, its board members noted that Indiana law would still give Lilly significant protections against unwanted takeovers. Indiana has some of the highest hurdles in the country for slowing down and thwarting hostile takeovers.

Investors typically favor low barriers to hostile takeovers because an acquiring company almost always pays a premium price to entice shareholders to approve such mergers. But the votes of the past two years were hindered because the owners of 13 percent or more shares did not vote on the measure.

Some investors suggest Lilly could be vulnerable to a takeover soon because its major patents expired late last year on its best-selling drug, the antipsychotic Zyprexa, allowing cheaper generic copies to rapidly drain the medicine’s $5 billion in annual revenue.

Zyprexa was the second in a string of five blockbuster Lilly drugs that lose patent protection between 2010 and 2014, sapping the company of more than $10 billion in annual revenue.

Lilly’s research-and-development efforts have produced little new revenue since a string of drugs was launched from 2002 to 2004. Investors are hoping a new Alzheimer’s drug, solanezumab, pans out and becomes a huge seller.

Lilly CEO John Lechleiter has repeatedly rejected the notion of a mega-merger, and he has constantly argued that Lilly’s pipeline eventually will start producing new drugs—and badly needed revenue.
 

ADVERTISEMENT

  • Do the right thing
    Inland Steel was taken over in the 1990's. The steel company was profitable. The cash flow from Inland was parlayed into one of the largest steel conglomerates in the world. The new owner from India replaced American executives with his own. In other words, the executives that made it possible become unemployed. The company did well. The American's employed did not. What is the right thing to do?

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Gay marriage is coming, whether or not these bigots and zealots like it or not. We must work to ensure future generations remember the likes of Greg Zoeller like they do the racists of our past...in shame.

  2. Perhaps a diagram of all the network connections of all politicians to their supporters and those who are elite/wealthy and how they have voted on bills that may have benefited their supporters. The truth may hurt, but there are no non-disclosures in government.

  3. I'm sure these lawyers were having problems coming up with any non-religious reason to ban same-sex marriage. I've asked proponents of this ban the question many times and the only answers I have received were religious reasons. Quite often the reason had to do with marriage to a pet or marriage between a group even though those have nothing at all to do with this. I'm looking forward to less discrimination in our state soon!

  4. They never let go of the "make babies" argument. It fails instantaneously because a considerable percentage of heterosexual marriages don't produce any children either. Although if someone wants to pass a law that any couple, heterosexual or homosexual, cannot be legally married (and therefore not utilize all legal, financial, and tax benefits that come with it) until they have produced a biological child, that would be fun to see as a spectator. "All this is a reflection of biology," Fisher answered. "Men and women make babies, same-sex couples do not... we have to have a mechanism to regulate that, and marriage is that mechanism." The civil contract called marriage does NOTHING to regulate babymaking, whether purposefully or accidental. These conservatives really need to understand that sex education and access to birth control do far more to regulate babymaking in this country. Moreover, last I checked, same-sex couples can make babies in a variety of ways, and none of them are by accident. Same-sex couples often foster and adopt the children produced by the many accidental pregnancies from mixed-sex couples who have failed at self-regulating their babymaking capabilities.

  5. Every parent I know with kids from 6 -12 has 98.3 on its car radio all the time!! Even when my daughter isn't in the car I sometimes forget to change stations. Not everybody wants to pay for satellite radio. This will be a huge disappointment to my 9 year old. And to me - there's so many songs on the radio that I don't want her listening to.

ADVERTISEMENT