Billionaire investor Carl Icahn, Mylan Laboratories' largest shareholder, yesterday stepped up pressure on the Canonsburg generic drug maker, threatening to nominate his own slate of directors and oust management if Mylan proceeds with its acquisition of King Pharmaceuticals.

In a letter to Mylan Chief Executive Officer Robert J. Coury, Icahn said that Bristol, Tenn.-based King is "a company that Mylan should avoid at any price."

Mylan announced on July 26 that it planned to purchase King for $4 billion as a way to move into the branded drug business and acquire a sales force to help market Mylan's new hypertension drug, nebivolol.

Icahn, who has said the proposed $4 billion deal was too expensive, also disclosed he has increased his stake in Mylan to 9.8 percent and enlisted a third formidable ally: Artisan Partners, a Milwaukee, Wis., investment firm that owns 4.3 million shares, or 1.6 percent of Mylan's stock.

Artisan joins UBS Global Asset Management, which holds a 3.9 percent stake in Mylan, in backing Icahn's attempt to block the King acquisition.

Coury shrugged off Icahn's letter, saying it was the same rhetoric contained in previous communications. Mylan's directors and management will continue their analysis of King's problems "and will be neither distracted nor deterred by Mr. Icahn," Coury said.

Icahn's threat to nominate a slate of directors may strike a responsive chord with some shareholders.

GovernanceMetrics International, a New York firm that evaluates companies on corporate governance issues, ranks Mylan 2.5 on a scale of 1-to-10, with 10 being the best. It faulted the drug maker for compensation practices, lack of independent directors, and business deals between the company and officers, directors or their relatives, said Gavin Anderson, GovernanceMetrics chief executive officer.

Anderson cited the $2 million bonus Coury received in the fiscal year ended March 31, $1.1 million of which was guaranteed. His firm considers seven of Mylan's 11 directors non-independent. Five are current or former officers.

In the face of mounting criticism, more companies are putting more outsiders on their boards, believing shareholder interests are better served if more directors have fewer ties with management. Charles Elson, chairman of the University of Delaware's Weinberg Center for Corporate Governance, said independent directors control 75 percent or more of the board seats at most companies.

Mylan has "an exceedingly high percentage of insiders or quasi-insiders compared to what's going on inside corporate America today," said Donald Hambrick, a management professor at Penn State's Smeal College of Business. "I can see why Icahn is trying to do what he is."

Mylan spokeswoman Heather Bresch said the company meets New York Stock Exchange requirements for having a majority of independent directors. Two corporate governance consultants, Institutional Shareholders Services and Glass, Lewis & Co., concur with that assessment, she said.

Mylan shares closed yesterday at $16.96, off 26 cents, putting Icahn about $13 million in the hole on his Mylan investment to date. According to a securities filing he made yesterday, Icahn has paid $459.1 million for his 26.3 million shares, or an average of $17.46 per share.

Shares of King finished at $10.60, down 31 cents. They were trading at $10.37 before Mylan announced its offer for the company July 26. Their lackluster performance indicates growing skepticism the purchase will be consummated.

The deal calls for King shareholders to receive 0.9 Mylan shares for each of their shares, which means King shares would be trading around $15.26 if investors thought the deal was going to go through.

Icahn's latest parry comes on the heels of King's disclosure last week that accounting issues may require it to restate results for this year and last. Mylan would be able to walk away from King if that happens, an opportunity Icahn urged Coury to seize.

Mylan, which in the wake of King's disclosure postponed a road show that was to have started yesterday to sell institutional investors on the deal, maintains that King will give it a much needed footprint in the brand name drug business.

Icahn believes Mylan can find a better partner, saying almost all of King's branded products face serious challenges. The activist investor has hired consultant A.T. Kearney to evaluate alternatives.

Kearney's report "will show that there are many avenues that Mylan could pursue that make more strategic sense than the transaction with King," Icahn wrote Coury.