Icahn Girds for Biogen Battle

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On Tuesday, activist investor Carl Icahn finally made good on his threats to attempt an overthrow of Biogen Idec's (Nasdaq: BIIB) board of directors, filing a definitive proxy statement with his own slate of candidates.

Icahn's attempt to get three of his own directors on Biogen's board results from his displeasure with how Biogen handled its aborted sales process last year. Attached to the proxy statement he submitted to the SEC, he enclosed a letter accusing Biogen's current board of directors and management of sabotaging the sales process.

His letter discussed how Biogen put last year's potential acquirers in a Catch-22. To properly value the company, they needed Biogen to let them talk to its marketing partners for some of its top drugs. But Biogen wouldn't allow these due diligence requests to proceed until potential buyers gave it a bid.

Icahn has raised his stake in Biogen in recent months, now controlling more than 12 million shares of the drugmaker. He noted in his proxy letter that getting his three directors onto Biogen's 12-seat board doesn't mean he'll try to sell the company again; he is "not seeking to immediately sell the company" unless it fetches a bid at a "significant premium" -- not likely. His patience in not engineering a sale of ImClone Systems (Nasdaq: IMCL) after he changed up its management team in 2006 would seem to back up his statements.

For its part, Biogen argues that it has outperformed indices like the S&P 500 and the AMEX Biotechnology Index over the past four years. The company cautions investors not to be "misled by Carl Icahn’s rhetoric," urging them instead to vote for its slate of nominees for the board.

A dose of independent investor involvement can often be good for a company. Less independent boards can often produce badly mismanaged companies, or leadership asleep at the wheel, as with PDL BioPharma (Nasdaq: PDLI) or Flamel Technologies (Nasdaq: FLML) in recent years. Even if Icahn's investment horizon is not always as long-term as many other investors', it's tough for this Fool to see how a little extra board independence will hurt Biogen.