Biovail Responds to Dissident Circular

Business Wire,  June 6, 2008  

Tags: Biovail Corp.

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Vote Your BLUE Proxy Now

TORONTO -- Biovail Corporation (NYSE, TSX: BVF) today released the following Letter to its Shareholders.

Dear Fellow Shareholder of Biovail Corporation,

You now face a critical decision about the future of your Company. In May, you received a Management Proxy Circular that outlined the steps your Board is taking to create sustainable long-term shareholder value at Biovail. More recently, Eugene Melnyk, a significant shareholder and the Company's former Chairman and CEO, mailed a Dissident Proxy Circular which includes the list of individuals he has nominated in order to take control of your Board of Directors and your Company.

In his Dissident Circular, Mr. Melnyk also makes a number of unfounded and misguided attacks on your Company, its Board, its management and its strategy. To help you make a decision based on facts, we correct the more significant errors and omissions in detail in this letter.

Mr. Melnyk does not offer a realistic strategy for enhancing shareholder value. He would simply like to turn back the clock by more than a decade. He uses the Company's performance from the 1990s as an argument to return to a Melnyk-dominated "Old Guard" now - while ignoring the reality of significant change in both the pharmaceutical industry and the capital markets in the intervening years.

Mr. Melnyk prefers to look at what he calls the "golden years" but not what can rightly be called "The Lost Years" at Biovail - the period from 2001 to 2007 when he was CEO or Chairman or both. It was during this period that Biovail lost much of its competitive position, its product pipeline and its shareholder value. While Mr. Melnyk was a senior executive of Biovail until just four months ago, he ignores his own central role in creating the operating, financial and legal challenges that your current Board is successfully addressing today.

Nostalgia is not a strategy. Selective memory is not management. And allowing Biovail to be controlled by Eugene Melnyk is not in the best interests of Biovail shareholders.

The Board believes that the election of the Melnyk nominees is not in the best interests of all Biovail shareholders. The reasons for this conviction are detailed in the following pages.

In summary:

* Eugene Melnyk is attempting to take control of Biovail without paying you for it

By placing his handpicked nominees on the Board, Eugene Melnyk could exercise effective control over Biovail.

* Eugene Melnyk is the problem Biovail is trying to solve - not the answer

The strategic and operating challenges Biovail is addressing now stem directly from the actions - and inaction - of Eugene Melnyk when he led the Company.

* The Biovail nominees bring more expertise, more independence, and better corporate governance experience to the Board than the Melnyk nominees

The Melnyk nominees represent a potential return to the Lost Years at Biovail.

* Biovail's current Board and Management are taking action to implement a viable and effective strategy to create sustainable shareholder value

The Melnyk nominees are tied to a vague, archaic and poorly conceived plan that does not reflect the realities of the pharmaceutical industry today

Your choice:

Prior to Biovail's annual meeting on June 25, you must decide between the Company's independent and experienced nominees to the Board and Mr. Melnyk's handpicked slate.

The decision you make will be important - but we believe it is not a difficult choice.

CHOICE: Accept - or reject - Eugene Melnyk's attempt to gain control of Biovail without paying you

Biovail shareholders should be under no illusions that Mr. Melnyk's efforts are anything other than an attempt to take over their Company. While his settlement of suspicious trading allegations with the Ontario Securities Commission precludes him from serving as a director of the Company for several more weeks, he has selected his nominees to serve his interests.

* By gaining control of the Board, Mr. Melnyk would effectively gain control of the direction of the Company without any compensation being paid to other shareholders. In most takeovers, shareholders receive a significant premium to the current share price in exchange for handing over control of their company. Mr. Melnyk is offering nothing.

* The majority of the Melnyk nominees have reported to Mr. Melnyk in the past and there can be no assurance that they will not continue to be influenced by him.

* Three of the Melnyk nominees worked for Mr. Melnyk at Biovail before resigning. Two others are external legal counsel hired by Biovail while Mr. Melnyk was running the Company. Others have had past business relationships with Mr. Melnyk or Bruce Brydon, Mr. Melnyk's choice as a new CEO.

* Through his nominees, Mr. Melnyk could influence the Board but, if he chooses, he could also become more directly involved by having his nominees place him on the Board or into a management position within a matter of weeks. Given Mr. Melnyk's past record, Biovail shareholders should be concerned that this would not be in their best interest.