Sanofi-Aventis SA is unwilling to meet demands by Genzyme Corp. to both raise its $18.5 billion offer and make a later payment based on sales goals for the drug Campath, said three people with direct knowledge of the matter.
The board of Sanofi, France’s biggest pharmaceutical company, would be open to one of the concessions, but not both, said the people, who declined to be identified because the deliberations are confidential. While executives of the companies aren’t in talks, their advisers have been in contact, the people said.
Sanofi must decide this week whether to extend its hostile tender offer at $69 a share, raise the bid, or walk away if it doesn’t win support from enough Genzyme shareholders. The offer for the Cambridge, Massachusetts-based company expires at midnight on Dec. 10.
“We think Sanofi will extend the offer with no bump” in price, Lionel Melka, co-manager of Bernheim, Dreyfus & Co.’s Diva Synergy Fund, an event-driven fund focused on acquisition targets that owns Genzyme shares, said in a Dec. 2 interview. “They really believe that no white knight will emerge.”
Genzyme told shareholders in October to reject the bid, saying the price didn’t include potential revenue from Campath and two other new medicines expected to win approval by 2013. Campath is approved for blood cancer, and Genzyme says it also works against multiple sclerosis. The company is in the final stages of testing the drug against MS and expects data from those trials next year.
Genzyme wants a clause known as a contingent value right under which stockholders would receive more money from Paris- based Sanofi if sales goals are reached, the people said.
Campath produced revenue of less than $150 million last year, according to Genzyme. The company predicts sales of about $3 billion by 2017, while Sanofi cites analysts’ estimates for peak sales from multiple sclerosis of $700 million.
Sanofi took its offer for Genzyme directly to shareholders on Oct. 4, after Genzyme Chief Executive Officer Henri Termeer spurned the bid as too low and refused to negotiate. The offer ignores expected revenue growth after the company fixed manufacturing flaws that caused drug shortages, Termeer said.
Genzyme shares have traded at more than $69 since the offer was made public Aug. 29, suggesting Termeer has shareholders who support his refusal to negotiate with Sanofi at that price.
Sanofi Chief Financial Officer Jerome Contamine said as recently as Dec. 1 that the $69-a-share bid is a “very good price.” He declined to comment on whether Sanofi will extend the offer.
Genzyme fell 45 cents to $70.26 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The shares have gained 30 percent since July 22, the last day of trading before Sanofi’s interest was first reported. Sanofi rose 72 cents, or 1.5 percent, to 48.55 euros at the close of Paris trading.
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