The offer of $69 a share, or about $18.5 billion, had been set to expire Dec. 10. About 2.2 million shares, or less than a percent of the stock outstanding, were tendered by the deadline, the Paris-based company said in a statement today.
“This allows for more time to find the right price, and for Genzyme to start opening its doors to Sanofi,” said Eric Le Berrigaud, an analyst at Raymond James in Paris, in a telephone interview today. He has a “buy” recommendation on Sanofi shares.
Sanofi, France’s largest drugmaker, took its offer for Cambridge, Massachusetts-based Genzyme directly to shareholders on Oct. 4, after the U.S. company’s chief executive officer, Henri Termeer, spurned the bid as too low and refused to negotiate. The offer, made public Aug. 29, undervalues Genzyme’s stable of experimental drugs and ignores expected revenue growth after the company fixed manufacturing flaws that caused drug shortages, Termeer said.
“The results of the tender offer reported today demonstrate that our shareholders strongly support the view of the board that the Sanofi offer substantially undervalues Genzyme,” Termeer said in a statement today.
Genzyme shares have traded above $69 since the offer was made public, suggesting Termeer has shareholders who support his refusal to negotiate with Sanofi at that price.
“Genzyme values itself much higher than the current offer from Sanofi,” said Michael Obuchowski, chief investment officer at First Empire Asset Management Inc. in Hauppauge, New York, in an interview last month. “And investors value Genzyme higher than the current offer from Sanofi.”
The U.S. company wants Sanofi to both increase its offer and to make a later payment based on sales goals for its experimental multiple sclerosis drug Campath, three people with direct knowledge of the matter said Dec. 7. Sanofi is unwilling to meet both demands, they said.
Sanofi’s bankers at Evercore Partners Inc. and JPMorgan Chase & Co. met with Genzyme’s advisers from Credit Suisse Group AG and Goldman Sachs Group Inc. over the past few weeks to discuss the companies’ differing views of Genzyme’s value, the French drugmaker said in a regulatory filing today. They talked about using additional payments based on Campath to help bridge the gap, according to the filing.
Sanofi was given no confidential information on Genzyme and there’s no assurance the talks will continue, according to the filing.
Sanofi Chief Financial Officer Jerome Contamine told Bloomberg News on Dec. 1 he still considered the $69-a-share bid a “very good price.”
Genzyme shares rose 48 cents to $70.30 at 4 p.m. New York time in Nasdaq Stock Market trading. Sanofi fell 31 cents to 49 euros in Paris.
Sanofi is seeking acquisitions to replace revenue the company is losing as some of its biggest-selling products, such as the blood thinner Plavix and the cancer drug Taxotere, face competition from generic medicines.
Genzyme’s drugs are less likely to face generic competitors because they’re made from living cells and are harder to copy than pills made from chemicals. The U.S. Food and Drug Administration designated the therapies as orphan drugs because they’re for diseases without other treatment options, giving them more patent protection.
Sanofi’s $69-a-share offer is “opportunistic and inadequate,” Termeer wrote in a Nov. 8 letter to Sanofi CEO Chris Viehbacher, which was published in today’s filing. “We continue to have the support of our shareholders” and “are open to a transaction that appropriately recognizes Genzyme’s intrinsic value and prospects.”
The deal would be the biggest hostile takeover in the drug industry since the transaction that created Sanofi-Aventis in 2004, according to Bloomberg data. Sanofi-Synthelabo acquired Aventis for about $64 billion after raising its bid once.
Genzyme said today it will hold an analyst and investor meeting in New York on Dec. 20 to discuss the commercial prospects for Campath.