Icahn Turns Up Heat, Files Suit to Force Biogen Idec to Turn Over Records of Failed Sale

4/9/08Follow @bbuderi

Activist investor Carl Icahn launched another salvo in his battle to force a sale of Biogen Idec (NASDAQ: BIIB), filing a suit yesterday in a Delaware court demanding that the Cambridge biotech turn over documents related to its unsuccessful effort to sell itself last year. Icahn has previously charged that the sale process, which was carried out under pressure from him, was deliberately undermined by Biogen officials—an accusation the company has strongly denied.

Now comes the lawsuit. Reuters broke the news yesterday. According to that article, Icahn’s complaint, filed in Delaware Chancery Court, repeats his earlier accusations that the confidentiality agreements prospective buyers were required to sign before they could talk to two key Biogen partners, Elan Pharmaceuticals and Genentech, were too restrictive. Both companies hold some change-of-control rights on key Biogen drugs—Elan on the multiple sclerosis and Crohn’s disease drug Tysabri, and Genentech on cancer-fighting Rituxan. Biogen’s restrictions on how suitors could talk to the companies, Reuters said Icahn charged in the complaint, “prevented any potential bidders from learning where Biogen’s third-party partners stood on exercising change-of-control options on key Biogen drugs.”

In the wake of the failed sale, Icahn has nominated candidates for three Biogen board seats that are up for election at the company’s annual meeting to be held at a still-unspecified date this spring. In the lawsuit, according to Reuters, Icahn said the records he wants Biogen to relinquish could help the biotech’s stockholders decide whether a new slate is warranted.

Naomi Aoki, a spokeswoman for Biogen, said that Biogen does not consider Icahn’s request valid. “We believe his request is simply another in a series of manipulative tactics to advance a single-minded agenda of forcing a sale of the company, this time by using the request to propagate his wild conspiracy theories about the sale process,” she said this morning.

Icahn’s suit was prompted by Biogen’s rejection of a request made by the investor on March 28 for all documents related to the design and conduct of the sale process, including minutes from board meetings, Aoki said. At that time, Icahn indicated he wanted to look at the materials and decide what information should be provided to shareholders ahead of the annual meeting and vote on board members.

Biogen refused to hand over the information that Icahn demanded in part because CEO Jim Mullen and the company already shared much of it at a JP Morgan conference in early January, Aoki said. What’s more, she said, Icahn himself was a potential bidder on the company, and has already received much of the information he’s now seeking. “He has the information he says he’s looking for,” Aoki said. To disclose anything beyond what is already disclosed, which would include confidential internal documents, “we believe would compromise and negatively affect our ability to maximize value for shareholders in any future sale process,” she said.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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