Genzyme in Icahn's Sights

(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
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.

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) 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) 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.

Follow Adam Feuerstein on Twitter.

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; click here to send him an email.

More from Stocks

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

News From Starbucks and General Electric Leaves Their Investors Up in Arms

News From Starbucks and General Electric Leaves Their Investors Up in Arms

Facebook Messenger Could Bring in Billions of Dollars -- Here's How

Facebook Messenger Could Bring in Billions of Dollars -- Here's How

How to Invest in Cannabis - In Its Many Forms

How to Invest in Cannabis - In Its Many Forms

5 Stocks That Are Screaming Buys Right Now

5 Stocks That Are Screaming Buys Right Now