Genzyme in Talks to Sell Itself to Takeda, Mail Says

Genzyme Corp. started talks with Takeda Pharmaceutical Co. to try to sell itself for more than $18.5 billion, the Mail on Sunday reported, citing a person familiar with the matter.

Takeda, which could pay $82 a share, is among several drugmakers that Genzyme has approached in recent weeks to foil a hostile $69-a-share offer from Sanofi-Aventis SA, the London newspaper said. Mihoko Shinomiya, a spokeswoman for Osaka, Japan-based Takeda, declined to comment on the report, saying the company doesn’t respond to market speculation.

Genzyme Chief Executive Officer Henri Termeer told investors last month the Cambridge, Massachusetts-based biotechnology company was trying to assess its value and gauge outside interest. He estimated Genzyme could be worth $89 a share after lifting its profit forecast. Sanofi took its offer for Genzyme hostile on Oct. 4 after the largest maker of medicines for rare genetic disorders spurned the bid as too low.

“Genzyme has been apparently talking to different companies to find better match/price and/or force Sanofi to get serious,” Michael Obuchowski, chief investment officer at First Empire Asset Management Inc. in Hauppauge, New York, said in an e-mail today.

Photographer: Pankaj Nangia/Bloomberg News

Henri A. Termeer, chief executive officer of Genzyme Corporation. Close

Henri A. Termeer, chief executive officer of Genzyme Corporation.

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Photographer: Pankaj Nangia/Bloomberg News

Henri A. Termeer, chief executive officer of Genzyme Corporation.

“Buying Genzyme would make sense for Takeda,” he said. “Takeda has been trying to aggressively grow their U.S. business.”

Different Focus

Obuchowski said his company owns about $600,000 of Genzyme shares.

Takeda fell 0.5 percent to 3,920 yen in Tokyo trading, while Japan’s Nikkei 225 Stock Average rose 1.1 percent. Genzyme dropped 0.5 percent to $69.84 on the Nasdaq Stock Market on Nov. 12, trimming its advance this year to 43 percent.

Takeda shares fell on concerns the company may sell new shares to finance the acquisition, said Fumiyoshi Sakai, an analyst at Credit Suisse Group AG in Tokyo. Takeda makes Actos, the world’s best-selling diabetes drug.

“Genzyme makes treatments for rare diseases, which is different from the area of focus of Takeda,” said Sakai, who rates the stock “neutral.” “It’s not impossible for Takeda to finance the acquisition, but it doesn’t strengthen Takeda’s pipeline.”

GlaxoSmithKline, Pfizer

London-based GlaxoSmithKline Plc, New York-based Pfizer Inc. and Eli Lilly & Co., based in Indianapolis, also have been linked with potential bids for Genzyme, the report in yesterday’s Mail on Sunday said. Paris-based Sanofi is the only bidder for Genzyme, CNBC reported Nov. 10.

Genzyme’s drugs for genetic diseases are made using biological processes and are harder for generic competitors to copy than pills made from chemicals. The U.S. Food and Drug Administration has designated the therapies “orphan drugs” because they target diseases that lack other treatment options, giving them added patent protection.

Takeda predicts net income will fall to 230 billion yen ($2.8 billion) in the 12 months ending March 31 and to 200 billion yen in the fiscal year ending March 2013, a 12-year low, as competition from generic copies of Actos erodes profit.

Takeda is targeting cancer, metabolic diseases and central nervous system ailments such as Alzheimer’s disease and Parkinson’s disease for drug development. The drugmaker, Asia’s largest, has about $5 billion available for acquisitions and “could easily borrow $10 billion,” President Yasuchika Hasegawa said in a Sept. 22 interview.

To contact the reporters on this story: Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net; Jason Gale in Tokyo at j.gale@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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