Sanofi-Aventis Said to Be Likely to Bid $18 Billion for Genzyme
Sanofi-Aventis is likely to make an unsolicited offer of up to $70 a share for Genzyme, raising the stakes for what could become one of the year’s biggest deals, people briefed on the matter said Wednesday.
Sanofi’s board met on Wednesday and agreed to let management make a formal proposal, one of these people said. At $70 a share, Sanofi’s bid would be worth about $18.6 billion.
Sanofi would likely issue a bear hug letter that would outline its proposed bid, these people said. Such a letter is friendly on its surface, but signals a willingness to go hostile if necessary.
Such a move could put pressure on Genzyme’s directors, some of whom have been more receptive to Sanofi’s informal approach than others, these people said. A bear hug letter could also rally Genzyme shareholders.
Genzyme’s shares have climbed about 26 percent since reports surfaced last Friday of Sanofi’s approach.
Sanofi approached Genzyme earlier this year about a potential combination, one that would bolster Sanofi’s drug pipeline and significantly increase its presence in biopharmaceuticals.
Adding Genzyme, one of the four largest biotechnology companies and a maker of vaccines for genetic disorders, would be one of Sanofi’s largest deals to date. Genzyme’s market value last Thursday was about $14.5 billion, the day before reports of Sanofi’s approach.
If Sanofi continues to pursue Genzyme, it will need to deal with two formidable activist investors who have stakes in the biotech company: Carl C. Icahn and Ralph Whitworth, both of whom have representatives on the Genzyme board. Both have pushed Genzyme to take steps to increase its stock price.
Genzyme makes drugs like Cerezyme, a treatment for Gaucher’s disease, and Fabrazyme, for Fabry disease.
The company has struggled to improve its stock performance after it battled a viral contamination problem at its main production plant in Boston last year. Concerns about the manufacturing may limit what Sanofi would be willing to pay, one of the people briefed on the matter said.
Michael J. de la Merced, The New York Times 28-07-2010
Consort Health