Billionaire Biogen Idec shareholder Carl Icahn won a victory in his legal wrangling with the biotech when a Delaware court judge agreed to award him access to internal documents regarding efforts to sell the company last year.

Icahn sued Biogen last month to obtain the documents as ammunition in his proxy battle. Upset over Biogen's failed attempt to find a buyer, he wants to nominate three members to the board of directors at its annual meeting in June (¹ Also see "Biogen Power Struggle: Icahn Seeks Board Seats" - Pink Sheet, 29 January, 2008.).

At a May 20 court hearing, Delaware Chancery Court Judge William Chandler III said he had debated whether Icahn demonstrated a true need for the information. However, according to a transcript of the hearing, Chandler said what tipped him "slightly" in favor of the stockholder are the conflicting statements made by Biogen CEO James Mullen and others about the process involved in putting Biogen up for sale.

Chandler said these statements "give rise to a basis for the stockholder plaintiffs here needing access to the actual documents that would demonstrate unequivocally, it seems to me, whether there was some deliberate effort here to manipulate the process or to create a process that was doomed to fail from the outset."

In a ruling from the bench, the judge said he would grant Icahn's demand for the documents but stipulated that the information must be kept confidential.

Biogen announced in December that it had been unable to find a buyer after a strategic search (² Also see "Despite Strategic Review, Biogen Idec To Remain Independent" - Pink Sheet, 12 December, 2007.). Icahn claims the company acted to placate large shareholders who wanted Biogen to sell the firm and intentionally bungled the process.

Bear Stearns analyst Mark Schoenebaum said that, in a general sense, the judge's decision is a victory for Icahn. "If, indeed, a 'smoking gun' document exists," the ruling should help Icahn's team obtain it, Schoenebaum wrote in an analyst note. However, he said it is uncertain whether the judge will allow the information to be made public, and in order to influence the shareholder vote, it must be available well before the shareholder meeting June 19.

"Thus, we believe the judge's decision has only modestly changed the probability that Icahn's director slate is nominated," Schoenebuam said.

- Brenda Sandburg (b.sandburg@elsevier.com)

Icahn Wins Access To Biogen Idec Documents

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