Sanofi-Aventis Said to Make Genzyme Buyout OfferJeffrey McCracken and Elizabeth Lopatto
Sanofi-Aventis SA made a takeover approach to Genzyme Corp., the largest maker of medicines for genetic diseases, about two weeks ago, said two people with knowledge of the matter.
Sanofi, France’s biggest drugmaker, is waiting for a response to the approach and hasn’t entered substantive merger negotiations, said the people, who declined to be named because the talks are private. The offer values Genzyme at less than $20 billion, they said. Genzyme surged 15 percent to $62.52 at 4 p.m. New York time in Nasdaq Stock Market composite trading.
Acquiring Genzyme, the world’s largest maker of medicines for genetic diseases, would help Sanofi expand in biotechnology. Sanofi Chief Executive Officer Chris Viehbacher briefed Sanofi’s board the week of June 28 on plans for a major acquisition in the U.S., two other people with knowledge of the situation said.
“This is plausible, it’s not ridiculous,” said Geoffrey Porges, an analyst at Sanford Bernstein & Co. in New York, in a telephone interview today on Sanofi’s potential bid for Genzyme. He has an “outperform” rating on Genzyme.
John Lacey, a spokesman for Genzyme, said, “We don’t comment on rumors and speculation,” in an interview today. Sanofi spokesman Jean-Marc Podvin didn’t immediately return a call seeking comment.
Cambridge, Massachusetts-based Genzyme’s stock market value was about $14.5 billion at the close of trading yesterday. The Wall Street Journal and CNBC reported on the approach earlier today.
Viehbacher is counting on acquisitions to help replace revenue the Paris-based company is losing as its medicines face competition from lower-priced generic drugs. Sanofi has spent about $17 billion on 25 acquisitions since Viehbacher joined the company in 2008, according to data compiled by Bloomberg.
The shares of Genzyme, Allergan Inc. and Biogen Idec Inc. rallied in U.S. trading on July 2 after Bloomberg reported that Viehbacher was considering a major acquisition in the U.S. Allergan dropped $1.49, or 2.4 percent, to $61.07 in New York Stock Exchange composite trading. Biogen declined $2.70, or 4.8 percent, to $53.47 in Nasdaq Stock Market trading, the biggest drop since Oct. 23, 2009.
‘Not For Sale’
Genzyme Chief Executive Officer Henri Termeer said in a June 14 interview that the company wasn’t for sale. The company is focused on fixing manufacturing defects that cut into sales of its biggest products, Termeer said. He is seeking to revive the drugmaker after sales slumped 2 percent to $4.5 billion last year, following a virus contamination at Genzyme’s Allston Landing factory in Boston.
Genzyme has said it will spin off three business units. Sanofi may have reviewed those businesses and decided to buy the whole company and restructure it, Porges said today.
Activist investors Carl Icahn and Ralph Whitworth, both of whom have representation on Genzyme’s board, will likely push for a sale, Porges said.
Last year, Sanofi acquired Merck & Co.’s half of their Merial animal-health venture for $4 billion, Viehbacher’s biggest purchase so far. In March, Sanofi bought Chattem Inc., the U.S. maker of Gold Bond medicated powder and other non-prescription health products, for $1.9 billion.
Drugmakers have announced about $83.5 billion of acquisitions in the past year. In the past month, Celgene agreed to buy Abraxis Bioscience Inc., a maker of drugs for solid-tumor cancers, for $2.9 billion. Grifols SA struck a $3 billion deal for Talecris Biotherapeutics Holdings Corp., and Valeant Pharmaceuticals Inc. and Biovail Corp. signed a merger pact.
Amy Reilly, a spokeswoman for Cambridge, Massachusetts-based Biogen, and Caroline Van Hove, a spokeswoman for Allergan, of Irvine, California, said they don’t comment on market rumors.
(Updates shares in the second paragraph.)
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