Medivation Rejects Sanofi Bid Again, Calling It `Opportunistic'

  • Board has decided offer undervalues company, Medivation says
  • Sanofi urges Medivation directors to engage in negotiations

Medivation Inc. rejected Sanofi’s unsolicited $9.3 billion takeover offer again after the French drugmaker threatened to go directly to shareholders if talks don’t begin, setting the stage for other possible suitors.

The board has already determined that the proposed price substantially undervalues the company, said Medivation, which first spurned the $52.50-a-share proposal last week. On a conference call Thursday to discuss first-quarter earnings, Chief Executive Officer David Hung repeated that the bid is too low, describing it as “highly opportunistic.”

The San Francisco-based company has only one marketed medicine -- Xtandi, for prostate cancer -- and said Sanofi’s proposal would deny its stockholders the value of future products. The French drugmaker said in a letter made public earlier Thursday that it would consider revising its offer if Medivation’s board engages in discussions. Meanwhile, several other potential suitors are circling the company, including Amgen Inc., AstraZeneca Plc, Pfizer Inc. and Novartis AG, according to people familiar with the matter.

Shares of Medivation, which have been trading higher than Sanofi’s offer as investors anticipate counterbids, were little changed in late trading Thursday after the company reported first-quarter earnings that fell short of analysts’ expectations. 

Missing Estimates

Profit before some costs totaled 11 cents a share, below the 23-cent average estimate, according to data compiled by Bloomberg. It was the third time in five quarters that adjusted profit missed expectations. First-quarter revenue rose 41 percent to $182.5 million, below estimates of $197.3 million.

Medivation rose less than 1 percent to $59.22 at the New York close. It traded at an average of about $35 in February and March, before reports Sanofi was interested in the company.

Medivation’s CEO spent more than an hour on a conference call with analysts discussing the past quarter’s results and explaining why the board had rejected Sanofi’s offer, calling the French drugmaker’s approach “ill-timed” and designed to take advantage of “significant market dislocation” in biotech.  

“We are extremely confident that our strategy will deliver more value to you than Sanofi’s proposal," he said on the call.

Shareholder Support

In Thursday’s letter, Paris-based Sanofi said Medivation’s top shareholders have signaled “overwhelming support” for a transaction.

“You should know that an acquisition of Medivation is a priority for Sanofi and we are committed to effecting it,” Sanofi Chief Executive Officer Olivier Brandicourt said in the letter. “If the Medivation board of directors continues to refuse to engage with us, then we intend to commence a process to remove and replace members of the board.”

Medivation would be trading in the $30s if Sanofi hadn’t offered to buy the company, Brandicourt said in his letter. That means the proposed takeover price gives investors an almost 100 percent premium, he said.

Cancer Treatment

Medivation specializes in therapies for hard-to-treat diseases, and larger companies’ need for new treatments has been spurring mergers and acquisitions this year. The company, which turned its first profit since 1999 just two years ago, was transformed on the back of its blockbuster pill for prostate cancer. That attracted Sanofi, which is seeking new medicines to spur growth as its Lantus insulin ages and a new cholesterol drug faces a patent battle.

Sanofi took its offer public a week ago after Medivation didn’t respond to an earlier approach and hired banks to defend itself. In a statement Friday, the French drugmaker said that combining the companies represents a “compelling strategic and financial opportunity” and that it remains committed to the transaction.

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