Icahn and Biogen Kiss and Make Up

Rather than coming out swinging in his round-three fight with Biogen Idec (Nasdaq: BIIB), Carl Icahn stuck out his hand and agreed to a compromise with the biotech yesterday. Biogen will give one of his three nominees a seat on the board in exchange for Icahn supporting the company's slate.

Is Icahn getting soft? I doubt it. Maybe he's saving his energy for Genzyme (Nasdaq: GENZ) and Take-Two Interactive (Nasdaq: TTWO)? Probably.

But it also seems likely that Icahn has Biogen's best interests at heart -- at least for now. The company is looking for a new CEO after James Mullen announced his resignation early this year. Who would want to step into that role with an Icahn proxy fight potentially hanging over the company?

Besides, the deal still results in Icahn having significant say in what happens at the company. Icahn now has three board seats, including the two he won last year. In addition, board member Brian Posner may also be an Icahn ally, considering that Icahn nominated Posner in his 2008 attempt to join the board of Yahoo! (Nasdaq: YHOO).

Four seats won't be enough to orchestrate a sale without some help -- the board will have 12 seats after the shareholder meeting -- but I'm not sure that's Icahn's immediate goal, anyway. Any sale is still complicated by its partnerships with Elan (NYSE: ELN) and Roche, which is one of the reasons Icahn has proposed breaking the company in two. He still seems to think that's a viable strategy, according to an interview with Bloomberg yesterday.

We generally think of activist investors as short-term thinkers who are only out to make a quick buck, but I think Icahn has a little long-term thinking in him. He was chairman of ImClone Systems for a few years before he convinced Eli Lilly (NYSE: LLY) to outbid Bristol-Myers Squibb (NYSE: BMY) for the company. He may end up using the same strategy here. Unleash some pent-up value; then get some large pharma to pay a premium on top of that.

Small-fry investors would certainly be happy with that. Just realize it may not happen until after round five or six.

See why Carl Icahn is Stephen Mauzy's favorite investor.