Tuesday, January 29, 2008

Icahn Goes to War With Biogen-Idec

From Bloomberg News:

Icahn Targets Biogen With Board Candidates, Criticism

By Luke Timmerman and Elizabeth Lopatto

Jan. 28 (Bloomberg) -- Billionaire investor Carl Icahn said he plans to nominate three people to Biogen Idec Inc.'s board and criticized the company's earlier attempt to find a buyer as ``flawed.''

Biogen refused to let bidders talk to Irish drugmaker Elan Corp., its partner in the multiple sclerosis treatment Tysabri, Icahn said today in a regulatory filing. Biogen's sale process also included a confidentiality agreement ``so restrictive'' that it prevented potential acquirers from bidding, Icahn said.

Biogen, based in Cambridge, Massachusetts, lost more than $5 billion in market value on Dec. 13 after abandoning its plan to sell the company when it received no offers. Biogen started looking for a buyer in October after Icahn offered $23 billion for the company and said it was worth more.

``Biogen's recent purported attempt to find a suitor was not conducted in a way to enhance the success of the endeavor,'' Icahn said in the filing. ``We believe the process was flawed in a number of key respects and that the process was run to placate us and other large shareholders.''

The company fell 79 cents, or 1.3 percent, to $58.13 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The stock has gained 22 percent in the past 12 months.


Icahn's nominees are Alexander J. Denner, who manages investments controlled by Icahn; Anne B. Young, a neurology professor at Harvard Medical School, and Richard Mulligan, a genetics professor at Harvard Medical School. Denner and Mulligan are directors at ImClone Systems Inc., a biotechnology company controlled by Icahn, who serves as its chairman.

``We ran what can only be described as a comprehensive, thorough sale process that was in keeping with industry standards,'' Naomi Aoki, a Biogen spokeswoman, said today in a telephone interview in response to Icahn's announcement.

Biogen's board currently has 12 members, four of whom are standing for election this year, Icahn said in the statement. Icahn's group, Icahn Partners LP, and its affiliates also proposed a change in the bylaws to permanently set the size of Biogen's board at 12 members, Biogen said.

Biogen's board said in a statement today it will review Icahn's notice and ``consider it in light of the best interests of all shareholders of the company.'' No date has been set for the annual meeting, which has traditionally been in April or May, Aoki said.

Increased Holdings

Icahn held 12.4 million shares, or 4.2 percent, of Biogen, as of Jan. 25, he said today in a regulatory filing. The investor is known for buying into companies he deems undervalued and pressing for changes or a sale. As of Sept. 30, he owned 8.8 million shares, according to data compiled by Bloomberg.

``I'm sure he's trying to influence the management team,'' Eric Schmidt, an analyst with Cowen & Co., said in a telephone interview today. ``He may also be rabble-rousing to increase awareness that this is still an acquisition candidate.''

Besides questioning the sale process, Icahn said he reserves the right to oppose any bids Biogen may make to buy a smaller company. That could make Biogen less attractive to potential acquirers, Icahn said.

Last year, Icahn increased his holdings of MedImmune Inc. by almost 50 percent before the company agreed to be bought by AstraZeneca for $14.7 billion. Icahn also has holdings in other biotechnology companies, including Telik Inc. of Palo Alto, California, and AdventRx Pharmaceuticals Inc. of San Diego.

Icahn was named ImClone's chairman and five of his associates were elected directors in October 2006 after he engineered a takeover of the company's 10-member board and the ouster of Joseph Fischer as chief executive officer. Denner served as head of an executive committee until last August, when John H. Johnson was appointed ImClone's CEO.

``One big difference is that Icahn owns a much smaller piece of Biogen than he did ImClone, and Biogen has a much more stable organization,'' Schmidt said. ``I just think it's going to be more of an uphill battle as he's a smaller stockholder and the management is more entrenched and stable.''

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