Dancing vs dueling

15 January 2010 By Robert Cyran Follow @rob_cyran

The $14 bln U.S. biotech is getting a muchneeded shakeup. Relational Investors is backing management for now. But Carl Icahn, with a history of forcing companies into auctions, hovers. A sale might book a quick gain but a smaller, more focused firm would be more valuable.

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Genzyme's chief executive, Henri Termeer, said he has had no contact with Carl Icahn. The activist held a one percent stake in Genzyme as of midNovember, the last date for which data is available Another activist, Ralph Whitworth's Relational Investors, signed a standstill agreement with Genzyme on Jan. 6.

The fund, which owns a four percent stake in the biotech company, has agreed to support directors nominated by the company at its annual meeting. In exchange, Genzyme will appoint Ralph Whitworth and one other director nominated by Relational should it request this in November 2010. Relational will also keep its stake below 10 percent while the pact is in effect.

Genzyme's stock has fallen 33 percent in the past two years, as manufacturing difficulties caused shortages of two Genzyme drugs, Cerezyme and Fabrazyme. The company has resumed production of the two drugs and expects to meet all demand by the end of the second quarter.

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