Genzyme, coming off the defensive after its failed attempt to acquire a majority of New York-based Bioenvision’s stock, rejected SCO Capital’s claim to two Bioenvision board seats—and says it will move to block the addition of any new directors at this time. It was a clear sign that the fight for control of the New York biotech is far from over.
SCO, a minority shareholder in Bioenvision strongly opposed to Genzyme’s tender offer, claimed it had rights to the board seats in a letter filed last Wednesday with the SEC. The letter also called for a management overhaul and revocation of Genzyme’s existing sub-license to Bioenvision’s leukemia drug clofarabine in the U.S. and Canada—and said that SCO would push for a new exit strategy for Bioenvision investors.
The departure of two of Bioenvision’s six board members, announced yesterday, seemed to give SCO the opening it needed. But Genzyme is already moving to close any opening, I learned late yesterday afternoon from Genzyme director of corporate communications Maria Cantor. She says the company, which has received criticism for not communicating better during the takeover drama, wanted to make or clarify three key points.
First, she says, Genzyme examined “voluminous documents” relating to the Bioenvision board in conjunction with the merger agreement and found “nothing in those documents to confer any rights for SCO to join the board.” Second, she says, the company has representations from the current Bioenvision board that “no such rights exist.” Finally, she says, the Genzyme-Bioenvision merger agreement signed by Bioenvision’s board (even though it has not yet been approved by shareholders), as well as Genzyme’s acquisition of 22 percent of the company’s common stock, give it the power to block any new board members.
At Xconomy, we’re not clear on how that would be so, but Cantor is firm in that assertion. “No one can go on the Bioenvision board without our consent,” she says. Genzyme’s intention, she adds, is that no new board members will be added until shareholders have a chance to vote on merger with the company. That vote, our sources say, will take place later this year, either at the regular board meeting in December or a special meeting held before then.
We’re still trying to reach SCO president Jeff Davis, who has been uncharacteristically silent this week.
Bioenvision individual shareholder Adam Shay, who created the website www.rejectgenzymetenderoffer.com, says he’s rooting for SCO to get board representation. “It makes sense for me to get someone like SCO, who has a large interest in the company, and a large interesting in maximizing shareholder value, on the board,” says Shay. And whether or not SCO gets two board seats, he says, “I don’t see how anyone in their right mind could think that the merger vote that they going to go forward with has a shot at being approved. I think it’s quite apparent how the shareholders of Bioenvision feel.”
