SCO reiterates plan for Bioenvision; not in favor of Genzyme merger

By Lisa Kerner

Charlotte, N.C., Sept. 12 - Bioenvision, Inc. shareholders led by SCO Capital Partners LLC, in a seventh letter to the company's board of directors, said it will vote against Bioenvision's planned merger with Genzyme Corp. and will propose a new slate of nominees for election to the board at the Oct. 4 annual meeting.

The Sept. 12 letter, signed by Steven H. Rouhandeh, was included as part of a schedule 13D filing with the Securities and Exchange Commission.

"Despite repeated calls to members of the board of directors and officers, we have not been successful at establishing a dialogue with the company," SCO said, adding that it finds the board's lack of response "inexplicable" given that SCO is Bioenvision's largest common shareholder.

"Our view of the failed Genzyme tender offer seems to be consistent with approximately 78% of common shareholders: the $5.60 offer is extremely inadequate and the result of a poorly managed and ill-timed sales process," the letter stated.

SCO's slate of board nominees is expected to include SCO's Rouhandeh and former Bioenvision director Jeffrey Davis as replacements for Michael Kaufman and Joseph Cooper. The investor also plans to re-nominate Christopher Wood and Scott Nelson "for continuity purposes" in addition to at least one new independent director.

SCO reiterated its idea that Bioenvision should augment key management positions and terminate the Genzyme sub-license for clofarabine in North America as part of its plan to unlock value for the company.

Also, SCO believes the sale of Bioenvision in 2008 at an offer price in excess of $10 per share is possible.

As previously reported, Genzyme's proposed acquisition of Bioenvision is valued at about $345 million and had been expected to close in July. The deal would give Genzyme exclusive, worldwide rights to clofarabine, which was co-developed by Bioenvision and Genzyme for the treatment of acute lymphoblastic leukemia.

SCO owns 7,209,331 shares of Bioenvision, or 13.1% of the company's stock.

Bioenvision is a New York biopharmaceutical company, and Genzyme is a Cambridge, Mass.-based biotechnology company.

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