|What was the point of the merger in the first place if this is the new goal... (edit -- i mean how on earth does CI believe that de-merging will ADD value -- other than to the lawyers that is)...|
UPDATE: Icahn Suggests Biogen Split As Proxy War Continues
By Thomas Gryta
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Billionaire investor Carl Icahn wants Biogen Idec Inc. (BIIB) to consider splitting into two companies, one focusing on neurology and the other on cancer, as he wages his second proxy fight with the biotech company in as many years.
Icahn continued to criticize the Cambridge, Mass., company's effort to sell itself in late 2007, contends that management isn't focused on shareholder value, and made numerous references to his successful turnaround of ImClone Systems Inc. in a filing with the Securities and Exchange Commission.
The Icahn group, which holds a 5.6% stake, is seeking four seats on Biogen's 13-seat board, a move that Biogen is opposing. The company's shareholder meeting is set for June 3.
"This seems like nothing more than an 11th hour tactic in order to win votes," said Biogen spokeswoman Naomi Aoki, who noted that the filing is the first time the company has heard of a plan to split the company.
Officials from Icahn's group were unavailable for comment.
Shares of Biogen recently traded down 1% to $48.70, but are down 23% in the last 12 months, compared to a 15% drop in the Amex Biotech Index.
Last month, Icahn's group began criticizing the $6.4 billion merger of Biogen with Idec Pharmaceuticals in 2003 that created the current company on the grounds that it never lived up to the projected synergies.
His proposal to split the company seems to effectively reverse that merger. The neurology-focused company would have reported $2.9 billion in sales in 2008, while a cancer-focused company would have reported $1.2 billion in sales. Biogen Idec's 2008 total revenue was $4.1 billion.
Icahn said the move would improve management's focus and the appeal of those assets to outside buyers.
Morgan Stanley analyst Steven Harr expects investors to have a "difficult time" with the Icahn plan, because it may trigger change-in-control provisions in Biogen's drug partnerships that could cause it to lose its shares in the drugs.
Biogen sells multiple-sclerosis treatment Tysabri with Elan PLC (ELN) and cancer/arthritis drug Rituxan is sold with Genentech Inc., a unit of Roche Holding AG (RHHBY).
Harr also noted that a separation could also trigger a downgrade of the individual companies' debt because of concentrated risk and reduced cash holdings.
In Tuesday's filing, Icahn proposed that he could reach similar results in turning around Biogen that he had with ImClone Systems. Icahn took control of ImClone in 2006, when its stock price was at $31, and sold the company to Eli Lilly & Co. (LLY) last summer for $4.5 billion, or $70 a share.
As with ImClone, Icahn hopes to "recharge" partner relations with Genentech and Elan, shift the cost structure, and boost research and development in order to change the culture and bolster the company's pipeline.
The billionaire first became involved in Biogen in 2007, when he prompted a sale process that failed to attract any bidders. He attempted to put three people on the board last year but obtained only 19% of shareholders' votes.
Icahn has consistently disapproved of that sales process, claiming the company put up barriers in the auction process that discouraged companies from bidding the $20 billion to $25 billion needed to complete the deal. He subsequently filed a successful lawsuit seeking documents related to the sale attempt.
Biogen has contended that bidders were wary of the high price tag in relation to the risk related to Tysabri, which was withdrawn from the market for a period because it was suspected to cause a rare but often deadly brain disease.
-By Thomas Gryta, Dow Jones Newswires; 201-938-2053; email@example.com