Genzyme and Carl Icahn reach agreement on directors, ending proxy fight

US biotechnology firm Genzyme, which has been fighting a battle with billionaire investor and activist Carl Icahn and certain of his affiliated private investment funds, revealed yesterday that the parties has reached agreement to settle their proxy contest. Nevertheless, the company's shares, already down 22% in the last 12 months, dipped a further 1.3% to $47.16.

Under the agreement, the Icahn funds will withdraw its slate of four nominees for Genzyme's board of directors and vote its Genzyme shares in favor of the company's nominees, and Genzyme will appoint two of Mr Icahn's nominees - Steven Burakoff and Eric Ende - to serve as directors immediately following its June 16 annual meeting of shareholders. In return, Mr Icahn - who had nominated himself and three others to the board - will withdraw his slate and vote his shares in favor of the company's nominees.

Genzyme has had manufacturing facility problems and plant shutdowns which resulted in supply shortages for two of its leading products, the Gaucher's disease drug Cerezyme (imiglucerase for injection) and Fabrazyme (agalsidase beta) for Fabry disease. This, in turn, led not only to sharply lower revenues, but also a $175 million fine from the US Food and Drug Administration (The Pharma Letters passim).