Sanofi Target Genzyme More Attractive to Buyers With Unit Sales
Genzyme has six bidders for the drug business, Chief Financial Officer Michael Wyzga said today at an investor conference. Sale of the units will make Genzyme more appealing to potential buyers, said Michael Yee, with RBC Capital Markets.
Genzyme, the world’s largest maker of medicines for rare genetic diseases, rejected Paris-based Sanofi’s $69-a-share buyout offer last month. Genzyme said Sept. 13 that it will sell its genetics-testing unit to Laboratory Corp. of America Holdings for $925 million in cash. That business was the largest of three units that don’t produce genetic-disorders drugs which Genzyme said in May it planned to divest.
The unit sales are “positive for the takeout because it is improving margins, reducing costs and it should be accretive to earnings,” Yee, an analyst based in San Francisco, said today in a telephone interview. “Over the next three to six months, they could get taken out at $75 to $80.”
Genzyme spokesman Bo Piela declined to comment on the offer amounts for the units or to identify the bidders.
Genzyme declined 6 cents to $70.69 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The shares gained 30 percent since July 22, the last day of trading before Sanofi’s buyout interest was made public.
LabCorp paid a premium of 2.5 times revenue for Genzyme’s genetic-testing business, Yee said. The diagnostics unit could get a similar premium and be sold for as much as $500 million, Yee said. The drug ingredients unit, with that premium, might sell for as much as $100 million, he said.
LabCorp and Quest Diagnostics Inc. may be potential buyers for the diagnostics unit, Yee said. He didn’t name likely suitors for the other business. Calls placed today to Burlington, North Carolina-based LabCorp and Quest, of Madison, New Jersey, weren’t immediately returned.
The diagnostics business has annual revenue of about $167 million, while the drug ingredient unit has sales of about $30 million, Yee said in a Sept. 13 research report.
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