The return on Amylin will add to the debate about Icahn's record as a stock picker and the effect he has on a company he targets. It could also play into the dynamics of his next high-profile battle in the healthcare sector with Forest Laboratories Inc.

Icahn became an investor in Amylin in early 2008 and was instrumental in driving the company's management to consider a sale, although his efforts in 2009 to engineer a sale to its then diabetes drug partner, Eli Lilly and Co, failed.

Bristol-Myers Squibb Co said late on Friday it would buy Amylin, in which Icahn is the third-largest shareholder with an 8.8 percent stake, for about $5.3 billion in cash to extend its portfolio of diabetes treatments. Bristol-Myers also struck a deal with AstraZeneca Plc, under which AstraZeneca will pay it $3.4 billion and collaborate on developing Amylin's products.

It took Icahn plenty of letters to the company's management, as well as litigation to pressure the company to clinch a deal. Still, his returns are modest by the standards of the legendary corporate raider-turned-activist investor.

His average cost base for his Amylin stake is likely to be around $25.40 per share, according to a Reuters analysis based on his disclosed holdings and the average Amylin share price in each of the quarters the disclosures were made. The deal with Bristol-Myers is for $31 per share.

At that price, Icahn will pocket a profit of $80.56 million, excluding dividends, equating to a 22.05 percent return in just over four years. Over the same period, the S&P healthcare index is up 22.16 percent.

For Icahn, whose healthcare investments have generated more than $2 billion in profits over the past six years, the returns on Amylin are a far cry from his triumph with ImClone Systems Inc, for example, where he engineered a $6.5 billion sale to Eli Lilly in 2008. The billionaire investor has said he made a 112 percent return on ImClone, in which he first showed interest in 1995.

The Amylin deal again shows that Icahn is persistent and eventually he often gets what he wants. Last year, for example, after a lengthy battle in which Icahn agitated for change and a sale of Genzyme Corp, the company was sold to Sanofi SA for about $20 billion. The deal was the second-largest ever in the sector.

Representatives of Icahn, who has not yet talked publicly about Amylin's announced deal with Bristol-Myers, were not reachable on Sunday to comment.

Amylin's price tag meets Icahn's earlier stated expectations.

"I do not sell cheaply and would certainly not recommend selling Amylin unless we were offered at least over $30 per share, at which time I might recommend selling it," Icahn wrote in a letter to Amylin's top management in April 2009.

If the deal goes through at $31 per share, Icahn's modest returns will be down to timing. He bought 44 percent of his current stake in the first quarter of 2008 when the average share price was $33.11, according to Reuters data and U.S. Securities and Exchange Commission filings.

Other investors who bought Amylin's shares later are in for much more lucrative returns. Even before the deal was announced on Friday, the company's shares had already more than tripled in value from a low of nearly $8 last October.

The Amylin investment could have turned out worse for Icahn. In a survey of investors carried out by Mark Schoenebaum, an analyst at ISI Group, 53 percent of the respondents said Bristol-Myers overpaid, while 45 percent said it paid about the right price.

FOREST CHALLENGE

With Amylin in the bag, the focus of Icahn followers is likely to turn to Forest, where the 76-year-old financier recently started round two of a war after losing a proxy battle last year. So far he has not said what he wants Forest to do, but has criticized the company mostly over corporate governance issues, including succession planning and asked for more information on other issues.

Icahn owns about 26.4 million shares, or 9.92 percent, of Forest, making him the second-largest investor in the U.S. drugmaker.

In a lawsuit against the company, he revealed his Forest stake cost him around $912 million, implying an average price of about $34.55 per share. Forest shares closed at $34.99 on Friday, meaning the investor is just above water in his Forest investment.

Icahn has struck a deal with Eric Ende, his nominee to lead the proxy battle against Forest, to share 1 percent of his profits above $47.50 per share under certain conditions, including Ende's election to the board of Forest. Ende can share in Icahn's profits for up to two-and-a-half years after Forest's annual meeting next month.

At $47.50, Icahn will make a profit of roughly $340 million, or a 37 percent return. But the unusual arrangement with Ende could also raise governance questions and play into the hands of Forest as it formulates its defense.

(Reporting by Paritosh Bansal and Greg Roumeliotis in NEW YORK; Additional reporting by Toni Clarke in BOSTON; Editing by Matt Driskill)

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