Founder drops bid for control of Biovail

Biovail Corp. founder Eugene Melnyk said Monday that he will not present his alternative slate of directors at the company's reconvened annual meeting next week and plans to put his efforts into a new privately held company.

Canada's largest publicly traded pharmaceutical company said last week that it would hold the meeting on Aug. 8 to have another vote on Melnyk's move to change its board and strategic direction after a court ruled on July 16 that the vote at a June 25 meeting was invalid.

That count went heavily against Melnyk after he withdrew his dissident proxies before the vote, leaving the meeting without a quorum. The board hastily amended the company's bylaws to allow the meeting proceed with only 25 percent of shares represented.

Melnyk took the company to Ontario Superior Court, and Justice Herman Siegel ruled that Biovail could not change its bylaws on the fly and had broken rules in the Canada Business Corporation Act.

The record date to vote at the Aug. 8 meeting remains April 28.

"While we were pleased with the court's (April 28) finding, the reality is that almost 90 million Biovail shares have been traded since April 28," stated Melnyk, suggesting that his position would have been stronger with a July record date.

"As a result, we wanted a new record date to best position the future of the company to be determined by its current shareholder base. However, on July 20th, the court affirmed the April 28th record date for the meeting," he said.

"Largely as a result of this, I have determined that it is in everyone's best interest _ particularly the shareholders of Biovail _ to let (chairman) Doug Squires, (CEO) Bill Wells and their management move forward with their plan."

Nelson Isabel, a spokesman for the company, said, "Biovail is pleased this process will be soon be concluded, and remains focused on executing the company's new strategy for the benefit of all shareholders."

The court also ruled July 20 that previously submitted proxies remain valid. Shareholders who didn't vote before can take part in the new vote, and those who previously submitted proxies can change their votes.

The judge had ordered Biovail to reconvene the meeting by Sept. 23, but Squires promised the new vote would be held as soon as possible.

Melnyk, also owns the Ottawa Senators hockey team, retired as Biovail's chairman last June. As the company's biggest shareholder with 12 percent of the company, he proposed a 10-person board slate, claiming the enterprise has become stagnant.

Wells is shifting focus to specialized treatments for central nervous system ailments _ a new area for the company that Melnyk had argued was too risky, maintaining Biovail should stick with its generic drug business.

But on Monday, he said Biovail "has said that their new plan will return the company to greatness. As the company's largest shareholder, I hope they are right."