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Genzyme in Icahn's Sights

Carl Icahn formally notified Genzyme that he will seek shareholder approval to seat four handpicked directors, as TheStreet reported earlier this morning.

(Genzyme stock quotes refreshed in this update.)

CAMBRIDGE, Mass. (

TheStreet

) -- Carl Icahn is taking the fight to

Genzyme

(GENZ)

in a bid to wrest control of the biotech company from embattled Chairman and CEO Henri Termeer.

The billionaire investor has formally notified Genzyme that he will seek shareholder approval to seat four handpicked directors, including himself, on the company's board.

TheStreet

was the first to report Icahn's plans early Monday, which were later confirmed by Genzyme in a statement.

Icahn

, whose proxy fight with Genzyme was widely anticipated, is expected to make his intentions known publicly later Monday in a filing with the

Securities and Exchange Commission

.

"Our actions demonstrate that we are open and responsive to shareholder input, and we welcome a constructive dialogue with Mr. Icahn," said Termeer, in a statement.

Henri Termeer, CEO of Genzyme

Genzyme shares recently were down 27 cents, or 0.5%, to $55.70.

Genzyme is trying to recover from the

worst operational crisis

in the company's history. Sloppy manufacturing and quality control problems at Genzyme's Boston facility over the past year led to shortages of two key drugs, Cerezyme and Fabrazyme, used to treat rare genetic diseases. As a result, Genzyme's 2009 earnings barely grew and revenue fell. Last week, the company forecast 2010 adjusted earnings guidance below Wall Street's expectations.

Genzyme shares lost 26% of their value in 2009, sinking to a five-year low. The stock slump

fueled investor anger

and calls for a management shakeup, most notably the

resignation of CEO Termeer

, who has led the company for the past 25 years.

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Termeer has stated publicly that he has no intention of resigning and that he is the right person to lead Genzyme's turnaround.

Icahn is challenging Termeer's authority and pushing for more change at Genzyme with his burgeoning proxy fight, perhaps including Termeer's removal as chairman and CEO. Icahn increased his ownership stake in Genzyme to 4.8 million shares, or 2% of the company, as of Dec. 31, from 1.5 million shares earlier.

Icahn is no stranger to agitating for change at biotech companies he believes are being mismanaged, and therefore undervalued. After several tries, Icahn was able to seat two directors on the board of

Biogen Idec

(BIIB) - Get Report

last year. This year, he has nominated another three directors for the Biogen board and is involved in the company's search for a new CEO after the retirement of Jim Mullen (himself a likely casualty of Icahn's activism.)

At

ImClone Systems

, Icahn forced the old management team out, became chairman of the company and eventually helped get the company sold to

Eli Lilly

(LLY) - Get Report

in 2008.

Icahn also was responsible for the ouster, in 2009, of the chairman of

Amylin Pharmaceuticals

(AMLN)

.

If Icahn's dissident board members are elected at Genzyme's shareholder meeting on My 20, Icahn will control four seats on Genzyme's nine-member board. Besides himself, Icahn has nominated as board members his lieutenant Alex Denner, Harvard University professor Richard Mulligan and Dr. Steven Burakoff, an oncologist at Mt. Sinai.

It's not clear yet which of Genzyme's current board members are being challenged by the Icahn nominations.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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