Sanofi Extends Genzyme Bid to Feb. 15; Talks Ongoing
Sanofi Extends Genzyme Bid to Feb. 15; Talks Ongoing
Stephen Yang/Bloomberg
Discussions on the contingent value right enabled Genzyme and Sanofi to break a stalemate over the value of Lemtrada, which is approved for blood cancer and is being tested in multiple sclerosis, Genzyme Chief Executive Officer Henri Termeer said.
Discussions on the contingent value right enabled Genzyme and Sanofi to break a stalemate over the value of Lemtrada, which is approved for blood cancer and is being tested in multiple sclerosis, Genzyme Chief Executive Officer Henri Termeer said. Photographer: Stephen Yang/Bloomberg
Sanofi-Aventis SA extended its $18.5 billion takeover offer for Genzyme Corp. again, giving France’s biggest drugmaker more time to reach an agreement with the U.S. biotechnology company.
The two companies are still negotiating a so-called contingent value right, or potential additional payments tied to the performance of Genzyme’s experimental multiple sclerosis drug Lemtrada, Paris-based Sanofi said in a statement today. The company extended the $69-a-share offer to Feb. 15.
“Although those discussions have continued and have included commercial teams and executives of both Sanofi-Aventis and Genzyme, there remain significant differences on the potential CVR and the value of Sanofi-Aventis’s offer, and there is no guarantee that the parties will come to an agreement,” Sanofi said.
About 1.09 million Genzyme shares had been tendered and not withdrawn by midnight Jan. 21, when the offer was set to expire, Sanofi said. That’s down from about 2.2 million shares on Dec. 10, the original deadline.
“Our board has stated that the offer price of $69 per share undervalues the company,” Bo Piela, a spokesman for Genzyme, said in a telephone interview today. “And the board has recommended that shareholders reject the offer.”
Lemtrada’s Value
Discussions on the contingent value right enabled Genzyme and Sanofi to break a stalemate over the value of Lemtrada, which is approved for blood cancer and is being tested in multiple sclerosis, Genzyme Chief Executive Officer Henri Termeer said in a Jan. 11 interview.
Cambridge, Massachusetts-based Genzyme has projected peak sales of $3.5 billion for the drug, known as Campath when used for blood cancer. Sanofi said in October analysts’ estimates of about $700 million were a valuation “probably closer to the reality of the product.” Lemtrada is in the final stages of testing and Genzyme expects data from those trials this year.
Genzyme on Jan. 11 lowered its 2011 earnings and revenue forecasts. The announcement may not have helped the negotiations, said Eric Le Berrigaud, an analyst at Raymond James in Paris, who recommends buying Sanofi shares.
Super Credible
“Genzyme is likely to be a bit fragilized by this,” Le Berrigaud said in a telephone interview. “Sanofi must think Genzyme isn’t super credible but it still needs to clinch the deal. Genzyme shareholders are caught between the fear that Sanofi will walk away and the wish to get the highest price possible.”
Some 2.1 million people worldwide suffer from multiple sclerosis, which causes the body to attack itself through the immune system, with 200 people diagnosed with the disease each week in the U.S. alone, according to the National Multiple Sclerosis Society in New York. Lemtrada would be an addition to Sanofi’s own experimental MS treatment, called teriflunomide.
Sanofi rose 11 cents, or 0.2 percent, to 50.98 euros at the close of Paris trading. Genzyme declined 23 cents, or 0.3 percent, to $71.35 at 4 p.m. in Nasdaq Stock Market trading.
Sanofi took its offer for the U.S. biotechnology company directly to shareholders on Oct. 4, after Termeer spurned the bid as too low and refused to negotiate.
Genzyme, the world’s largest maker of drugs for rare genetic diseases, has products that 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.
Talks Progressing
Talks between Sanofi and Genzyme are progressing and there is value for both sides to do a deal “in a negotiated manner,” Termeer said in the Jan. 11 interview. A proxy battle, in which Sanofi would aim to replace Genzyme’s board of directors, “is unattractive to everybody,” Termeer said.
Sanofi is open to raising its bid by about $2 to get access to Genzyme’s books once the two sides agree on the extra payments, two people with knowledge of the situation said Jan. 7. Genzyme stock has closed above $69 every day since Sanofi made the bid public Aug. 29, indicating investors expect a higher offer.
In a Jan. 11 presentation in San Francisco, Sanofi Chief Executive Officer Chris Viehbacher said past mergers and acquisitions in the pharmaceutical industry failed to create value as drugmakers were “way too quick to pay more” than they should. The 50-year-old executive also said he would remain “disciplined” on deals.
The deal would be the biggest hostile takeover in the drug industry since the $64 billion transaction that created Sanofi- Aventis in 2004, according to Bloomberg data.
To contact the reporter on this story: Albertina Torsoli in Paris at atorsoli@bloomberg.net
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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