Sale of the unit, which makes reproductive and cancer tests, will be completed this year, Burlington, North Carolina- based LabCorp said today in a statement. Sanofi, which offered $69 a share, or about $17.6 billion, to buy Genzyme on Aug. 29, may be pressured by the unit sale to increase its offer, said Geoffrey Porges, an analyst with Sanford Bernstein & Co.
Genzyme Chief Executive Officer Henri Termeer said in an Aug. 31 interview that he would consider selling his Cambridge, Massachusetts-based company at a “fair value” above $69-a- share. Genzyme, the world’s largest maker of rare genetic disease drugs, said in May it would sell three units, including diagnostics, that don’t produce medicines for genetic disorders.
“Genzyme is making it clear they’re not sitting around waiting for Sanofi to raise their bid,” Porges said in a telephone interview about the unit sale today.
Genzyme fell 50 cents to $70.29 at 4:20 p.m. New York time in Nasdaq Stock Market composite trading. The stock climbed 30 percent from July 22, the last day of trading before Sanofi’s interest was made public. Sanofi increased 53 euro cents, or 1.1 percent, to 49.07 euros in Paris trading.
“Our offer to acquire Genzyme for $69 a share in cash remains unchanged,” Jean-Marc Podvin, a spokesman for Sanofi in Paris, said by telephone today. Bo Piela, a Genzyme spokesman, didn’t return a call seeking comment.
Sanofi Chief Executive Officer Chris Viehbacher said in an Aug. 30 conference call that the unit sold today wasn’t his main focus.
Sanofi’s bid for Genzyme may increase “into the low $70s,” said Michael Yee, an analyst with RBC Capital Markets in San Francisco, in a report today. Sales of the diagnostics and pharmaceuticals units can generate a combined $1.3 billion, he said.
Sanofi, based in Paris, has arranged for about $10 billion of underwritten loans to back its bid for Genzyme, two people familiar with the matter said on Sept. 10. The loans may be refinanced by bonds after the acquisition, the people said. JPMorgan Chase & Co., BNP Paribas SA and Societe Generale SA are providing the financing.
Genzyme’s Piela said Sept. 10 that the company would cut jobs, without specifying the number of positions. Genzyme has about 12,800 employees, Piela said. About 1,000 positions will be eliminated over 15 months, the Boston Globe reported on Sept. 10, citing a company memo.
Genzyme said on May 6 that it may sell three units to increase shareholder value, after contamination at the company’s Allston Landing plant caused the stock price to drop. The other two units, molecular diagnostics and pharmaceutical ingredients, will also be sold, Genzyme said today.
Genzyme said it may use proceeds from the LabCorp transaction to fund its $2 billion share-repurchasing program, to be completed by May 2011.
Credit Suisse and Goldman, Sachs & Co. provided financial advice to Genzyme, and the company’s legal adviser was Ropes & Gray.