Genzyme Corp and Carl Icahn have kissed and made up and settled a proxy contest where the billionaire investor was planning to get a lot more representation on the board of the troubled biotechnology firm.

Under the agreement, Icahn’s investment group has withdraw its slate of four nominees for Genzyme’s board of directors and will back the company’s nominees. In return, Genzyme will appoint two Icahn representatives - Steven Burakoff and Eric Ende - to serve as directors immediately following its annual meeting of shareholders on June 16.

Last month, Mr Icahn called on shareholders to boot out Genzyme chief executive Henri Termeer and three other current directors but now seems much happier. He said that “I am always pleased when a proxy fight can be avoided”. He claimed Drs Burakoff and Ende “will add significant medical and financial expertise to the Genzyme board” and said he is “very heartened” that the company brought on Ralph Whitworth, a longtime activist, as a director. The latter reportedly played a role in brokering the agreement between Mr Icahn and the board.

Mr. Icahn went on to say that “new oversight at the director level will help this great company achieve its full potential”. Mr Termeer was also pleased saying that “this agreement provides a pragmatic and constructive solution that allows us to focus on continuing to strengthen and build the company”.

These are tough times at Genzyme which is battling to sort out problems at its manufacturing site in Boston, which continues to affect production of Cerezyme (imiglucerase) for Gaucher disease and Fabrazyme (agalsidase beta) for Fabry disease. However Mr Termeer believes a corner has been turned, noting that “over the past year, we have made substantial progress in enacting operational and organisational changes to return to our historical path of sustainable growth”.