Sanofi Seeks To Acquire US Drug Maker Genzyme
Genzyme, a maker of drugs for rare diseases, has rebuffed a takeover offer from French drug maker Sanofi Aventis SA.
The offer of $18.5 billion, or $69 a share, was rejected as too low.
Sanofi said on Sunday it was in discussions with the US company Genzyme over ways to value a key Genzyme drug in a sign the two sides are moving closer to a deal.
Discussions over Campath, which Genzyme hopes to market as a treatment for multiple sclerosis (MS) under the brand name Lemtrada, are continuing between representatives from both companies, although Sanofi noted there was no guarantee of agreement.
At the heart of Genzyme’s bid defense is its estimate that the new MS drug could generate peak annual sales of $3.5 billion, compared with a figure of around $700 million underpinning Sanofi’s offer. Sources familiar with the situation earlier told Reuters the companies were moving closer in their discussions about a possible takeover and a resolution to the situation would likely occur within weeks rather than months.
According to one source, Sanofi would be willing to increase its $69 a share cash offer by a nominal amount and include a contingent value right (CVR) in a final deal, though the French company would be unlikely to strike a deal worth as much as $80 a share.
Industry analysts see little hope of Sanofi’s current offer prevailing. They believe Chief Executive Chris Viehbacher’s real aim is to buy time to get his opposite number Henri Termeer to the table. The two men have so far sat down together only once, in September, to discuss the bid situation, when Termeer made clear he was not prepared to enter talks unless Sanofi sweetened the offer.
More recently, however, speculation has increased he might be more willing to talk, in the absence of any alternative bidders. Viehbacher and Termeer will bump into each other again on January 11 in San Francisco, when they are scheduled to give back-to-back presentations at the annual JPMorgan Healthcare Conference.
The purchase of Genzyme would allow Sanofi entry into the high-margin business of rare diseases, as it seeks to diversify to make up for patent losses that will take out roughly a third of its 2008 sales base through to 2013. The market is certainly betting it will improve its current $69 offer. Genzyme shares closed on Friday at $71.39 and advanced in after-hours trading to $74.35.
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