Icahn Pressured MedImmune Board to Sell

Billionaire investor Carl C. Icahn disclosed yesterday that he had threatened to nominate a slate of opposing directors to MedImmune's board unless the company put itself up for sale, adding in an interview that the firm suffered from "very lackluster management."

Icahn's first public comments about MedImmune helped shed light on why the board of the Gaithersburg company abruptly switched course last week, authorizing its management to explore a sale after dismissing the idea at least twice before. A dissident investor with a smaller stake had begun publicly pressuring for a sale in December.

Icahn, who disclosed a 1.16 percent stake in Med Immune in February, said he told MedImmune four or five weeks ago that he had his own slate of directors ready to nominate, meaning he was preparing a proxy fight against the biotech firm. In an interview, he said, "Shareholder value would be highly enhanced if the company was sold because of the very lackluster management that has pervaded the company for the last five years."

His comments appeared to be aimed at MedImmune chief executive David M. Mott, who took over from founder Wayne T. Hockmeyer in October 2000.

MedImmune spokeswoman Jamie Lacey said Mott would have no comment.

Alex Denner, who oversees Icahn's biotech investments, said MedImmune has an excellent collection of assets, including the blockbuster pediatric drug Synagis, nasal flu vaccine FluMist, royalties from human papillomavirus vaccine technology and promising pipeline candidates. However, he said, "all of those assets have been sub-optimally managed" and would be better off in the hands of a large pharmaceutical company.

MedImmune said last week that it has received interest from major drug firms.

Icahn has a reputation as one of Wall Street's most relentless corporate raiders. Last year, when he was applying his customary pressure on biotech firm ImClone, he wrote a letter saying that if the chairman didn't quit "you will have thrown down the gauntlet." A month later, ImClone made him chairman of the board.

"Clearly there was a threat that Icahn was going to wage a proxy fight," against MedImmune, said David A. Katz, the president of Matrix Asset Advisors, the smaller investor that has written the board several times urging a sale.

The fight that threatened could have meant Med Immune's directors -- and management -- would "be removed unceremoniously," Katz said, adding that selling gives the board "the opportunity to create more value and leave as heroes with a lot of money in their pockets."

Also, Mott stands to make $100 million or more should the company be sold. He owns more than 605,000 shares of MedImmune and has nearly 6 million stock options.

Because MedImmune is exploring a sale, Icahn indicated that the threat of a proxy fight was over -- for now. He issued a statement saying he "reserves the right to launch a proxy contest in the event that MedImmune does not successfully complete the sale transaction."

Katz said a Bear Stearns analyst pointed out to him that MedImmune has bylaws that are favorable to shareholders, particularly in times of unrest. The firm's bylaws say, "Any director or the entire Board may be removed, with or without cause, at any time by vote of a majority of the shares then entitled to vote at an election of directors, or by written consent of the stockholders."

MedImmune shares jumped $1.25 yesterday on news of Icahn's demands, closing at $45.44. The firm's shares had climbed $5.79, to $43.63, Thursday on news of a possible sale. Those prices are in the ballpark of what some analysts think the company is worth to a buyer.