|
1.
|
NAME
OF REPORTING PERSONS
|
|
|
|
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
|
|
|
|
|
|
|
|
Pennant
Capital Management, LLC
|
|
|
2.
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
|
|
|
|
(a)
|
[_]
|
|
|
|
(b)
|
[X]
|
|
5.
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d)
OR 2(e)
|
|
[_]
|
|
6.
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
|
|
|
|
|
|
|
|
Delaware
|
|
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
|
|
8.
|
SHARED
VOTING POWER
|
|
|
|
|
|
|
|
5,508,000
|
|
|
9.
|
SOLE
DISPOSITIVE POWER
|
|
|
|
|
|
10.
|
SHARED
DISPOSITIVE POWER
|
|
|
|
|
|
|
|
|
5,508,000
|
|
|
11.
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
|
|
|
|
|
|
|
|
5,508,000
|
|
|
12.
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
|
|
|
|
CERTAIN
SHARES*
|
|
[_]
|
|
13.
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
|
|
|
|
|
9.95%
|
|
|
14.
|
TYPE
OF REPORTING PERSON
|
|
|
|
|
|
|
|
IA,
OO
|
|
|
1.
|
NAME
OF REPORTING PERSONS
|
|
|
|
I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
|
|
|
|
|
|
|
|
Alan
Fournier
c/o
Pennant Capital Management, LLC
|
|
|
2.
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
|
|
|
|
(a)
|
[_]
|
|
|
|
(b)
|
[X]
|
|
5.
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d)
OR 2(e)
|
|
[_]
|
|
|
|
|
|
6.
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
|
|
|
|
|
|
|
|
United
States
|
|
|
NUMBER
OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
|
|
8.
|
SHARED
VOTING POWER
|
|
|
|
|
|
|
|
5,508,000
|
|
|
9.
|
SOLE
DISPOSITIVE POWER
|
|
|
|
|
|
10.
|
SHARED
DISPOSITIVE POWER
|
|
|
|
|
|
|
|
|
5,508,000
|
|
|
11.
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
|
|
|
|
|
|
|
|
5,508,000
|
|
|
12.
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
|
|
|
|
CERTAIN
SHARES*
|
|
[_]
|
|
13.
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
|
|
|
|
|
|
|
|
9.95%
|
|
|
14.
|
TYPE
OF REPORTING PERSON
|
|
|
|
|
|
|
|
IN
|
|
|
Item
1.
|
Security
and Issuer.
|
|
|
|
The
name of the issuer is Axcan Pharma, Inc., a Quebec corporation
(the
“Issuer”). The address of the Issuer's offices is 597 Laurier
Boulevard, Mont-Saint-Hilaire, Quebec, Canada J3H 6C4. This
schedule relates to the Issuer's Common Shares (the
“Shares”).
|
|
Item
2.
|
Identity
and Background.
|
|
|
|
(a-c,
f)
|
This
Schedule 13D is being filed by Pennant Capital Management, LLC,
a Delaware
limited liability company (“Pennant Capital”), and Alan Fournier, a United
States citizen (each a “Reporting Person” and collectively the “Reporting
Persons”). The principal business address of the Reporting
Persons is 26 Main Street, Suite 203, Chatham, NJ
07928. Pennant Capital serves as the investment manager of
Pennant Offshore Partners, Ltd. and Pennant Windward Fund, Ltd.,
each a
Cayman Islands investment fund, and to Pennant Onshore Partners,
LP,;
Pennant Onshore Qualified, LP, Pennant Spinnaker Fund, LP, and
Pennant
Windward Fund, LP, each a Delaware investment fund (each a “Fund” and
collectively the “Funds”). Mr. Fournier serves as the managing
member of Pennant Capital and is primarily responsible for all
investment
decisions regarding each Fund’s investment portfolio. The
Shares reported herein are held in the portfolios of the
Funds.
|
|
|
|
|
|
|
(d)
|
Alan
Fournier has not, during the last five years, been convicted in
a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
|
|
|
|
|
|
|
(e)
|
None
of the Reporting Persons have, during the last five years, been
a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding were or are subject
to a
judgment, decree or final order enjoining future violations of,
or
prohibiting or mandating activities subject to, Federal or state
securities laws or finding any violation with respect to such
laws.
|
|
Item
3.
|
Source
and Amount of Funds or Other Consideration.
|
|
|
|
As
of the date hereof Pennant Capital Management, LLC may be deemed
to
beneficially own 5,508,000 Shares.
As
of the date hereof Alan Fournier may be deemed to beneficially
own
5,508,000 Shares.
No
borrowed funds were used to purchase the Shares reported herein,
other
than any borrowed funds used for working capital purposes in the
ordinary
course of business.
|
|
Item
4.
|
Purpose
of Transaction.
|
|
|
|
The
Reporting Persons acquired their Shares of the Issuer for investment
purposes.
The
Reporting Persons have no plans or proposals which, other than
as
expressly set forth below, would relate to or would result in:
(a) the
acquisition of additional securities of the Issuer or the disposition
of
presently-owned securities of the Issuer; (b) any extraordinary
corporate
transaction involving the Issuer; (c) a sale or transfer of a material
amount of assets of the Issuer; (d) any change in the present Board
of
Directors or management of the Issuer; (e) any material change
in the
present capitalization or dividend policy of the Issuer; (f) any
material
change in the operating policies or corporate structure of the
Issuer; (g)
any change in the Issuer’s charter or by-laws; (h) the Shares of the
Issuer ceasing to be authorized to be quoted in the over-the-counter
security markets; or (i) causing the Issuer to become eligible
for
termination of registration pursuant to Section 12(g)(4) of the
Securities
Exchange Act of 1934. The Reporting Persons, however, reserve
the right, at a later date, to effect one or more of such changes
or
transactions in the number of Shares they may be deemed to beneficially
own.
The
Reporting Persons have been and may continue to be in contact with
members
of the Issuer’s management, the Issuer’s Board of Directors, other
significant shareholders and others regarding alternatives that
the Issuer
could employ to improve shareholder value including, but not limited
to,
the resolution of the Issuer’s current regulatory issues, its plans with
respect to financial matters, improving the composition of the
Board of
Directors if they lack the skills and experience needed in order
to handle
the difficult and complex challenges that the Issuer currently
faces, the
implementation of corporate governance reforms and changes in the
Issuer’s
management. The Reporting Persons also may identify potential
bidders and/or investment bankers and notify them about the bidding
process that the Company has undertaken. The Reporting Persons
may engage in discussions with such persons to share views concerning
the
Company. The Reporting Persons do not intend to receive any
compensation for these activities.
The
Reporting Persons have attached as Exhibit C to this Schedule 13D
the
letter, dated December 4, 2007 (the “Letter”), from Pennant Capital
Management, LLC (“Pennant”) to the Board of Directors of the
Issuer. The Letter states that Pennant intends to call upon the
Issuer to disclose full details of the process undertaken to realize
(i)
the highest value for the Issuer, (ii) the ongoing role, compensation
and
ownership of management and directors in the new company, and (iii)
the
fairness option.
|
|
Item
5.
|
Interest
in Securities of the Issuer.
|
|
|
|
|
|
|
|
As
of the date hereof, the Reporting Persons may be deemed to beneficially
own 5,508,000 Shares, or 9.95% of the Shares of the Issuer, based
upon the
55,370,361 Shares outstanding as of October 31, 2007, according
to the
Issuer’s website.
|
|
|
|
|
|
Pennant
Capital Management, LLC shares the power to vote or direct the
vote of
5,508,000 Shares to which this filing relates.
|
|
|
|
|
|
Pennant
Capital Management, LLC has the sole power to vote or direct the
vote of 0
Shares to which this filing relates.
|
|
|
|
|
|
Pennant
Capital Management, LLC shares the power to dispose or direct the
disposition of the 5,508,000 Shares to which this filing
relates.
|
|
|
Pennant
Capital Management, LLC has the sole power to dispose or direct
the
disposition of 0 Shares to which this filing relates.
|
|
|
|
|
|
Pennant
Capital Management, LLC specifically disclaims beneficial ownership
in the
Shares reported herein except to the extent of his pecuniary interest
therein.
|
|
|
|
|
|
Alan
Fournier shares the power to vote or direct the vote of 5,508,000
Shares
to which this filing relates.
|
|
|
|
|
|
Alan
Fournier has the sole power to vote or direct the vote of 0 Shares
to
which this filing relates.
|
|
|
|
|
|
Alan
Fournier shares the power to dispose or direct the disposition
of the
5,508,000 Shares to which this filing relates.
|
|
|
|
|
|
Alan
Fournier has the sole power to dispose or direct the disposition
of 0
Shares to which this filing relates.
|
|
|
|
|
|
Alan
Fournier specifically disclaims beneficial ownership in the Shares
reported herein except to the extent of his pecuniary interest
therein.
|
|
|
|
|
|
Each
of the Reporting Persons has the right to receive and the power
to direct
the receipt of dividends from, or the proceeds from the sale of,
a portion
of the Shares reported herein.
|
|
|
|
|
|
The
trading dates, number of shares purchased and sold and price per
share for
all transactions in the Shares during the past 60 days by the Reporting
Persons on behalf of the Funds were all effected in broker transactions
as
set forth on Exhibit B.
|
|
Item
6.
|
Contracts,
Arrangements, Understandings or Relationships with Respect
|
|
|
|
to
Securities of the Issuer.
|
|
|
|
The
Reporting Persons do not have any contract, arrangement, understanding
or
relationship with any person with respect to the
Shares.
|
|
Item
7.
|
Material
to be Filed as Exhibits.
|
|
|
|
Exhibit
A: Agreement between the Reporting Persons to file jointly
Exhibit
B: Schedule of Transactions in the Shares of the Issuer
Exhibit
C: Letter to the Board of Directors of the
Issuer
|
SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify
that
the information set forth in this statement is true, complete and
correct.
|
|
December
5, 2007
|
|
|
(Date)
|
|
|
|
|
|
PENNANT
CAPITAL MANAGEMENT, LLC*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Alan Fournier
|
|
|
|
Name:
Alan Fournier
|
|
|
|
Title:
Managing Member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALAN
FOURNIER*
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Alan Fournier
|
|
|
|
Alan
Fournier
|
|
Attention: Intentional
misstatements or omissions of fact constitute Federal criminal violations
(see
18 U.S.C. 1001).
Exhibit
A
JOINT
FILING AGREEMENT
Pursuant
to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended,
each
of the undersigned hereby agrees that only one statement containing the
information required by Schedule 13D need be filed with respect to the ownership
by each of the undersigned of Common Shares of Axcan Pharma, Inc.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original.
Executed
this 5th day of December, 2007.
|
|
PENNANT
CAPITAL MANAGEMENT, LLC*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Alan Fournier
|
|
|
|
Name:
Alan Fournier
|
|
|
|
Title:
Managing Member
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALAN
FOURNIER*
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Alan Fournier
|
|
|
|
Alan
Fournier
|
|
*
The Reporting Persons disclaim beneficial ownership over the securities reported
herein except to the extent of the reporting persons’ pecuniary interest
therein.
Exhibit
B
TRANSACTIONS
IN THE SHARES
|
Date
of
Transaction
|
Number
of Shares
Purchased/(Sold)
|
Price
of Shares
|
|
10/5/07
|
(10,979)
|
21.14
|
|
10/8/07
|
(1,751)
|
20.96
|
|
10/9/07
|
(2,158)
|
20.96
|
|
10/11/07
|
(17,258)
|
20.95
|
|
10/12/07
|
(43,799)
|
20.96
|
|
10/19/07
|
14,607
|
20.61
|
|
10/22/07
|
95,393
|
19.84
|
|
10/23/07
|
50,000
|
19.90
|
|
10/25/07
|
11,000
|
19.95
|
|
10/26/07
|
129,000
|
20.52
|
|
10/30/07
|
120,000
|
20.83
|
|
10/31/07
|
410,000
|
20.39
|
|
11/2/07
|
50,000
|
18.77
|
|
11/28/07
|
170,000
|
18.14
|
|
11/29/07
|
1,000,000
|
22.60
|
|
11/30/07
|
687,900
|
22.58
|
|
12/3/07
|
400,000
|
22.53
|
Exhibit
C
LETTER
TO THE BOARD OF DIRECTORS
December
4, 2007
Mr.
Leon Gosselin
Chairman
Axcan
Pharma Inc.
597
Laurier Boulevard
Mont-Saint-Hilaire,
Quebec J35 6C4
Canada
Dear
Chairman and Members of the Board,
We
are writing to express our disappointment in the valuation that was obtained
for
the Company in the recently announced proposed transaction with TPG
Capital. While we support selling the Company, we believe the
valuation indicated is inadequate considering the strong cash flows of the
business coupled with significant net cash on the balance sheet. In
order to support any proposed transaction and to fully understand that
management and the Board have appropriately explored all alternatives to
maximize shareholder value, the proxy materials that will be provided to
shareholders must disclose full details of the process undertaken to realize
the
highest value for the Company, the ongoing role, compensation and ownership
of
management and directors in the new entity and the fairness
opinion.
Due
to
our concerns on the valuation of the transaction, the quality of the auction
performed and the potential for conflicts to exist with management and the
directors, shareholders require that the Board include full details of the
process that was undertaken. Details of the process should include when the
process started, all strategic or other investors contacted, all bids received
including whether from strategic or financial buyers, any modification of
bids
and any periods of exclusive negotiation.
We
believe that the absolute valuation of the proposed transaction is low relative
to the prospects of the business. The proposed takeout price values the Company
at $1.3 billion. The enterprise value is only $1 billion net of the
$310 million in net cash on the balance sheet (or>$5.50 per
share). Last year the Company generated over $100 million in free
cash flow (FCF) and $135 million in EBITDA (excluding the one-time acquired
in
process R&D charge of $10 million). This implies a 10% FCF/EV
yield or a multiple of 7.4x EV/EBITDA which we believe is significantly
undervaluing the future cash flows of the Company. We believe the
Company is worth at least $25/share using a relatively conservative 8x EBITDA
multiple which still results in a high single digit FCF yield.
While
the recent press release states that the acquisition was completed at a 28%
premium over the average trading price of the common shares on November 28th
,
we believe that the more relevant time period to look at is the last 90 days
over which time period most of the negotiations likely took
place. The stock price over that time period averaged $19.68 with a
52-week high closing at $21.29 during that period. The premium over
the average of that time period was only 19% which we consider inadequate
considering the strong performance of the business (most recently demonstrated
in the last quarter’s results) and the significant cash generating capabilities
of the business on a go forward basis. Ironically, if the deal had
been announced the day after the release of the Company’s most recent strong
financial results, the premium would certainly have been smaller or perhaps
non
existent.
The
timing of the deal announcement also causes us concern. The stock had
been trading at 52 week highs, north of $20/share in October based on very
strong results including beating revenue and earnings estimates for the last
8
quarters in a row, while being valued at a discount to peers and
having>$5/share in net cash. A report was released recommending
shorting the stock that caused a 14% decline in the share price from October
31st to the average closing the week prior to the announcement of the
deal. After reviewing the report with the analyst in detail, it
became clear that there was no new factual information, and in our opinion,
misinterpretation of the impending risks the Company faced. This was
coupled with a valuation analysis that was not reflective of the strong balance
sheet, cash flows and earnings power of the Company under any
scenario.
The
deal was then announced concurrently with very strong revenue and earnings
report that, coupled with guidance, likely would have driven a recovery in
the
stock price. So we are very concerned that the timing of the deal was
announced so that the premium looked much more substantial than it would
have if
the stock had merely reacted appropriately to the latest facts about the
operating and balance sheet strength of the Company.
We
believe that the Company has done an outstanding job in improving the core
business as continues to be evidenced by the strong financial
results. We are concerned that the strength of the business is being
undervalued by TPG Capital. We strongly urge the Board, as a part of
their fiduciary responsibility, to fully disclose the details of the process
and
evaluation to allow us to assess the fairness of this transaction.
Sincerely,
Alan
P.
Fournier
Managing
Member
Pennant
Capital Management, LLC
SK
03461 0004 835507