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Icahn takes control of ImClone, ousts its chief executive

October 26, 2006|From Bloomberg News

Billionaire investor Carl Icahn won his two-month campaign to take control of ImClone Systems Inc. on Wednesday, ousting the biotechnology company's interim chief executive and engineering his own election as chairman.

Icahn said he would seek a new chief executive with experience to boost sales of the New York-based biotechnology company's only product, the Erbitux cancer drug. ImClone's third-quarter profit rose 85%, beating analyst estimates, although sales of Erbitux were less than expected.

In taking the reins of the company that he has been seeking to control since August, Icahn can pursue his goal of expanding uses for Erbitux, installing a CEO with experience in running a biotech company and repairing a tattered relationship with marketing partner Bristol-Myers Squibb Co., a New York- based drug maker. Icahn owns 14% of ImClone shares and has handpicked five of the 10 directors.

Icahn's takeover is "an inevitable conclusion given the way things have transpired," said Brian Rye, a Janney Montgomery Scott analyst in Philadelphia. "It doesn't impact the underlying fundamentals of the company. It's going to be tough sledding after the next few quarters to reaccelerate growth, if in fact it can grow."

ImClone's shares rose $1.56, or 5.3%, to $31 on Wednesday. The shares are down 9.5% this year.

Three other directors -- Vincent DeVita, John Fazio and William Miller -- won't run for reelection at the next annual meeting, and Icahn dropped his solicitation of shareholder votes to remove them, the company said. Director Alex Denner, an Icahn ally, will lead an executive committee until a permanent chief replaces Joseph Fischer, who also left the board.

Icahn has been steadily gaining control of the company since last month, when he won election to the board along with three of his nominees at the company's annual meeting Sept. 20.

Icahn wasn't available Wednesday to comment, his assistant Susan Gordon said.

On Oct. 20, Icahn won board appointment of an additional ally, New York surgeon Peter Liebert, who filled one of the vacancies created with the departure of William Crouse and Chairman David Kies.

Icahn built a fortune estimated at $8.7 billion by Forbes magazine in part by buying into companies he deemed undervalued and pressing for asset sales and stock buybacks. A veteran corporate raider turned self-described shareholder activist, he has tried to force changes in companies as diverse as Trans World Airlines, Nabisco Group Holdings Corp. and Visx Inc., the maker of eye-surgery lasers.

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