Genzyme Reach Agreement with Relational Investors LLC (GENZ, HD)

Biotech Company, Genzyme Corp. (NASDAQ: GENZ), signed an agreement that may put the Activist Investor Relational Investors LLC as a sign of support for management as they try to rebound several production setbacks.

The several production setbacks started with Genzyme’s failure to increase the production of their Pompe Treatment Drug, Monzyme, year after year. Genzyme has also had problems with production in the Alston Massachusetts Plant. The production problems in the plant include temporary shutdowns because of viral contamination and failed regulatory inspections.

Relational Investors LLC is an investment fund worth approximately $6 billion that holds a 4% stake in Genzyme. Relational Investors LLC has been putting a lot of pressure on Genzyme to make changes in the board.

Genzyme has finally budged on the request with the agreement. In the agreement disclosed Thursday, Genzyme has agreed to appoint the head of Relational, Ralph Whitworth. In exchange for the appointment, Relational has agreed to support the Genzyme board nominees on the annual meetings and follow the board recommendation on shareholder proposals. Genzyme has also agreed to cease any activist related activities.

The appointment of Ralph Whitworth comes after Carl Icahn took a stake in Genzyme during the third quarter. Relational Investors is known for shaking up companies. In 2007, Relational has helped oust Robert Nardelli from Home Depot Inc. (NYSE: HD). In 2006, they were instrumental in the removal of Jay Sidhu from Sovereign Bancorp Inc.’s board.