Business

Sun Jun 15 19:29:22 PDT 2008

BOSTON (Reuters) –
Shareholders of Biogen Idec Inc (BIIB.O)
will meet shortly to decide whether one of the world's biggest
and oldest biotechnology companies should remain independent or
be put up for sale by billionaire investor Carl Icahn.

Shareholders will vote at their annual meeting on June 19
either to back Biogen's nominees for its board, or to support
an alternate three-member slate proposed by Icahn, who owns
roughly 4 percent of the company's stock and whose goal is to
unlock its value through a sale.

For now, Biogen is tipped to win. Last week three proxy
advisory firms issued reports backing Biogen, and while
investors do not always follow the advice of the advisers,
their recommendations make an Icahn victory less likely.

"If I had to handicap the outcome I'd lean a little more
towards Biogen's slate," said Damien Conover, an analyst at
Morningstar.

At stake is the Cambridge, Massachusetts-based company's
future as an independent entity. Icahn is seeking to
permanently limit the board to 12 members to prevent the
company from expanding the board and diluting his power.

Currently the company would be allowed to expand the board
beyond 12 members.

"When you make this vote you decide either for Biogen as an
ongoing concern because you believe in its products, or you opt
for a disruptive board that would probably create headwinds for
the ongoing business, in return for a sales premium if the
company were to be sold," Conover said.

Biogen, which sells the multiple sclerosis drugs Avonex and
Tysabri and the cancer drug Rituxan, tried and failed last year
to sell itself. Icahn, who urged the sale, claims Biogen
deliberately sabotaged it by conducting a flawed auction.

But Icahn could have a tough time convincing investors of
the company's incompetence.

Biogen's shares have risen about 50 percent over the past
five years, compared to a gain of about 8 percent in the Nasdaq
Biotech Index(.NBI). It has a market value of more than $17
billion and generated more than $3 billion in sales in 2007.

Even those who support Icahn's nominees, such as Argent
Capital, are doubtful he will win.

"Management has made a solid case for laying out their
growth goals and it's hard to argue from an execution
standpoint that they haven't been doing a good job," said Scott
Harrison, an analyst at Argent, which has nearly $1 billion
under management and owns 350,000 Biogen shares.

Argent believes Icahn can increase shareholder value faster
than Biogen, a view Icahn's team says is shared by others.

"We are receiving support from a number of large
shareholders, especially those with expertise in biotech and
those whose experience tells them to be appropriately skeptical
of such a strange sales process," said Alexander Denner,
managing director of the Icahn investment vehicle Icahn
Partners and Icahn's lead nominee to the board. He was
referring to the auction that Biogen ran last year and that
Icahn believed was flawed.

Biogen spokeswoman Naomi Aoki said the company is confident
it will prevail and that "shareholders who look at Biogen
Idec's performance and record of value creation over the past
five years will support the Board's slate."

Some believe investors will benefit either way.

William Butler, who helps manage about $650 million in
assets for high net worth individuals and small institutions at
Tirschwell & Loewy, said that while his company is not holding
Biogen for a quick turnover, and has a favorable view of its
long term prospects as a stand-alone company, if Icahn manages
to effect a sale of the company his clients would not be hurt.

"It's a win-win situation," he said. "You either get a
quick premium today or long-term steady earnings growth and
price appreciation."

(Reporting by Toni Clarke; editing by Carol Bishopric)

Source: Reuters