SCHEDULE 14A
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Exchange Act of 1934 (Amendment No. __)
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[ ] Soliciting Material Pursuant to ss. 240.14a-12
IMCLONE SYSTEMS INCORPORATED
(Name of Registrant as Specified In Its Charter)
CARL C. ICAHN
ALEXANDER J. DENNER
PETER S. LIEBERT
BARBERRY CORP.
HIGH RIVER LIMITED PARTNERSHIP
AND
HOPPER INVESTMENTS LLC
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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On October 6, 2006, Institutional Shareholder Services ("ISS") "M&A Insight" put
out a note to clients discussing Carl Icahn's recent activism at ImClone Systems
Incorporated. On October 9, 2006, ISS spoke with Mr. Icahn to get his version of
the events surrounding the Consent Solicitation and subsequently Mr. Icahn
provided written comments to Chris Young on a draft of the attached note. A copy
of the M&A Insight Note summarizing the October 9, 2006 conversation is filed
herewith as Exhibit 1.
EXHIBIT 1
INSTITUTIONAL SHAREHOLDER SERVICES
M&A Insight Note
Issuer: ImClone Systems (IMCL)/"A Conversation with Carl Icahn"
Date: October 18, 2006
On Oct. 6, M&A Insight put out a note to clients discussing Carl Icahn's recent
activism at ImClone Systems (IMCL). In the note, we indicated that Mr. Icahn's
actions (including seeking the resignation of board chairman David Kies and
launching a consent solicitation to gain control of the board) appeared to be
rather aggressive in light of the recent settlement reached by the two
combatants. We noted that Mr. Icahn's actions are likely to be used by IMCL (and
by future targets of Mr. Icahn) as "evidence" that Mr. Icahn is not to be
trusted and is unable to work constructively with incumbents.
On Oct. 9, we spoke with Mr. Icahn to get his side of the story.
Mr. Icahn stressed that at the time he accepted the offer of his board seat he
had no intention of conducting a consent solicitation. He made it clear that
because it takes a plurality of votes to win a proxy fight and a majority of
outstanding shares to win a consent solicitation, it would have been
"ridiculous" for him to have given up the chance to conduct a proxy fight in
order to join the board and then conduct a consent solicitation to remove
directors.
Mr. Icahn also stated that prior to this year's annual meeting, IMCL approached
him to try to reach an amicable settlement of their differences. Prior thereto,
Mr. Icahn had hired Alex Denner, who was a director of IMCL. IMCL then offered
to nominate Mr. Denner, Mr. Icahn and two persons suggested by him who were
among those vetted by the company. Mr. Icahn agreed not to nominate others for
election at the annual meeting.
During the discussions with IMCL, Mr. Icahn claims he made it very clear to the
company that he believed IMCL needs a CEO who has significant biotech
experience. Mr. Icahn notes that Joseph Fischer, the company's interim CEO, has
no biotech experience. Mr. Icahn alleges he clearly warned the company against
giving Mr. Fischer a long-term employment contract during settlement
discussions. However, on Aug. 23, the same day IMCL and Mr. Icahn announced the
settlement agreement, the company also disclosed an amendment to Mr. Fisher's
employment agreement. Mr. Icahn claims he was not notified of this amendment
before its adoption.
In addition, Mr. Icahn says that during discussions he had with Mr. Kies, Mr.
Kies indicated he had no interest in continuing as chairman. However, on Sept.
20, the same day as the annual meeting at which Mr. Icahn, Denner and two
persons suggested by Icahn were elected to the board, Mr. Kies called for a
board vote on his own chairmanship and subsequently was re-elected chairman. Mr.
Icahn characterizes this move as a betrayal of the representations made to him
during settlement discussions.
In short, Mr. Icahn believes that the company never seriously considered
addressing his concerns about the company's chairman and CEO and that IMCL had
been warned that by not taking the action that he suggested, they would be
"throwing down the gauntlet."
If Mr. Icahn's version of events are accurate, it helps to explain the unusually
rapid deterioration of relations between the dissident and the target company so
soon after an announced settlement. We note that a day after our conversation
with Mr. Icahn, the company announced the resignation of Mr. Kies and another
director, William Crouse. This development appears to address one bone of
contention of Mr. Icahn's; however, the suitability of the company's CEO
presumably remains at issue.
Unfortunately for shareholders, nearly every proxy fight becomes a "he said, she
said" exercise, a tough dynamic to analyze from the outside. One of the goals of
M&A Insight is to help interested constituencies to better analyze a sometimes
confusing debate.
We will continue to monitor this situation and market trends, speak with
interested parties and, where relevant, issue additional M&A Insight Notes to
provide further information and guidance for clients.
Please note that this M&A Insight research note should not be interpreted as an
indication of how ISS ultimately will recommend shareholders vote on the
proposed transaction. M&A Insight research notes are designed to highlight key
issues facing shareholders in selected high-profile or contentious transactions.
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Contact:
Chris Young, JD, CFA Qin Tuminelli, CFA
Director & Head of M&A Research Manager, M&A Insight
Tel. 301.556.0625 Tel. 301.556.0415
Christopher.young@issproxy.com Qin.tuminelli@issproxy.com
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