French drugmaker Sanofi-Aventis launched a hostile bid for Genzyme at $69 per share on Monday, taking its $18.5 billion offer direct to shareholders after Genzyme management refused to negotiate.
The move comes a month after Genzyme rebuffed an approach from Sanofi-Aventis at the same price. Sanofi has since been talking to Genzyme investors, who it said were frustrated by Genzyme management’s intransigence.
Sanofi’s unsolicited offer, all in cash, will expire on December 10 at 11:59 pm EST.
“Sanofi-Aventis has a history of being a patient, disciplined buyer,” Sanofi Chief Executive Chris Viehbacher told reporters in a conference call. “We believe the offer will be successful ultimately.”
Viehbacher, who wants to buy Genzyme to boost Sanofi’s drug portfolio as sales of older medicines decline, said his strong preference was for friendly talks, but he had decided to start a tender offer because of Genzyme’s refusal to enter discussions.
A Genzyme official at the company’s U.S. headquarters declined to comment.
Industry experts said the move was logical, though Sanofi might have to pay more to win the day. The CEO of a rival top-10 drugmaker told Reuters last week Viehbacher had little choice but to “fire a missile” by taking his offer direct to investors.
Thomson Reuters data, released on Monday, showed unsolicited bids accounting for 8 percent of global mergers and acquisitions so far in 2010 — the highest percentage in at least a decade.
Viehbacher said he met with the CEO of Genzyme, Henri Termeer, on September 20, but the talks were “unproductive.”
Sanofi has also talked with Genzyme shareholders who own more than 50 percent of the group, and these people supported Sanofi’s initiative to buy the company following recent manufacturing problems at the biotech group, he added.
Still, most Genzyme shareholders are looking for more.
“I am pretty sure they will not get it at $69,” said a fund manager at one of the top 10 largest mutual funds invested in Genzyme, who believes Sanofi could still make a deal pay at $80.
SIGHTING SHOT?
Mike Ward, an industry analyst at Ambrian Partners, agreed the current offer might well not win over the necessary majority of Genzyme shareholders.
“It doesn’t mean it’s in the bag, but if Viehbacher feels he’s got decent support among shareholders, he might as well start at $69,” he said.
