Biovail, Melnyk reach deal in proxy fight

Biovail Corp. and its founder and former chairman Eugene Melnyk have reached a truce in their proxy battle.

Melnyk, who is Biovail's largest shareholder, said Tuesday the drug company has agreed to the appointment of Frank Potter to its board of directors and audit committee immediately following May 28's annual meeting.

As part of the agreement, Melnyk and his holding firm, EM Holdings B.V., have agreed not to pursue their own dissident slate of two nominees for Biovail's board. Potter was included on the dissident slate.

Melnyk and EM Holdings also agreed to assist Biovail with meeting its quorum requirement for the meeting, will vote their 16.4 million common shares in favour of management's director nominees at the meeting and will refrain from any more proxy motions until after Biovail's annual shareholder meeting in 2010.

In a release, Melnyk indicated that a year of stability will benefit the company and all shareholders.

"I look forward to seeing continued progress at Biovail," he said.

"We are very pleased that we can now move forward and focus on the continued successful implementation of our new strategic focus through next year's AGM," said Dr. Douglas Squires, chairman of Biovail's board.

The move appears to mean peace after months of animosity between Melnyk and Biovail.

Last year, Melnyk tried to get a dissident slate of directors elected, resulting in the company's annual meeting being adjourned. An Ontario judge ordered the meeting to be reconvened, but Melnyk dropped his proxy fight before it took place.

Melnyk has expressed dissatisfaction with the past direction of the company.