Sanofi Seeks to Change Medivation Board as Advances Spurned

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  • French drugmaker proposes eight ‘highly qualified’ candidates
  • CEO Brandicourt says $9.3 billion proposal could be raised

Sanofi plans to ask Medivation Inc. shareholders to oust the board that spurned its $9.3 billion takeover offer. 

The Paris-based company proposed “eight independent and highly qualified candidates who are willing to fully and fairly evaluate all of Medivation’s strategic options, including Sanofi’s acquisition offer,” it said in a statement on Wednesday.

Chief Executive Officer Olivier Brandicourt wielded a carrot as well as a stick: if the existing board engages in talks, Sanofi could raise its offer, he wrote in a letter to directors dated May 25. Biotechnology companies Celgene Corp. and Gilead Sciences Inc. are also considering bids for Medivation, according to people familiar with the matter.

“We have been very clear that if you engage and provide information, we would be in a position to increase our offer and I am confident that we will be able to offer significant additional value,” he wrote. “We believe that we are in a position to provide more value than any other party given the strategic importance of the transaction to us.”

The San Francisco-based company has declined to engage in talks over the French drugmaker’s $52.50-a-share offer for the past six weeks. On Wednesday, it urged shareholders to reject the proposed board ouster, calling it “a tactic for Sanofi to facilitate its substantially inadequate and opportunistically-timed proposal.”

Other Suitors

“Under the leadership of its board of directors, Medivation has achieved great success and rewarded its stockholders with extraordinary results, delivering total stockholder returns of more than 1,440 percent since 2009,” founder and chief executive David Hung said. “In contrast, Sanofi has no duty to act in the best interests of Medivation or its stockholders.”

Medivation has only one marketed medicine -- Xtandi, for prostate cancer -- and has said Sanofi’s proposal would deny its stockholders the value of future products.

Pressure on Board

Sanofi is beginning a process known as consent solicitation, in which it requests shareholders’ permission to change the board without the need for a shareholder meeting, putting pressure on directors to engage in talks. If the U.S. Securities and Exchange Commission clears the final solicitation materials, Sanofi said it will reach out to shareholders and seek written consent to oust the board. A majority is required to replace directors.

The threat of a consent solicitation helped the activist investor Carl Icahn get a seat on the board of insurer American International Group Inc. earlier this year.

Some of the proposed board members hail from the world of finance, such as Wendy Lane, the chairman of Lane Holdings Inc., an investment firm, and James Tyree, the co-founder and managing partner of Tyree & D’Angelo Partners, a private equity investment firm. Those with industry experience include Michael Campbell, the former chairman of Arch Chemicals Inc., Barbara Deptula, the former chief corporate development officer of Shire Plc.

Sanofi said it had reached out directly and through advisers to Medivation over the past weeks to relay its “willingness” to enter into a confidentiality agreement, with no success so far. It cited media reports saying the U.S. company had signed confidentiality agreements with other parties.

Sanofi needs new medicines to spur growth as its blockbuster Lantus insulin ages and a new cholesterol drug faces challenges in the U.S. Brandicourt said that expanding in cancer is one of his goals.