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Storming Genzyme’s walls

I can’t help but hear in my head right now the parting words of Miracle Max and his wife to the heroes of the movie The Princess Bride, when they shout out, “Have fun storming the castle, boys!”

I don’t know that sanofi-aventis is having any fun yet as it looks to acquire Genzyme, but at least it seems unlikely that any reinforcements will be arriving for the target company as it digs its trenches and sanofi, in turn, begins the first stages of its assault.

Yes, the deal has finally gone into hostile takeover mode.

Ever since sanofi made it clear this summer that it wants to acquire Genzyme for $69 per share, many analysts have been equally clear in their opinion that no white knight is likely to show up and complicate the issue for sanofi. Some have dropped names like GlaxoSmithKline, Johnson & Johnson and Pfizer, but none have yet surfaced, and at least one executive at GlaxoSmithKline has said openly that the cost of Genzyme would be too high for his company.

So, with no other champion to vie for the hand of Genzyme, sanofi decided on Oct. 7 to go ahead with an assault on the castle, launching the hostile takeover effort and telling shareholders this is a good deal, since it represents a 38 percent premium over where Genzyme’s share price was sitting before acquisition speculations surfaced in July.

Points for persistence go to both sides. Genzyme insists it is being undervalued, and sanofi is still sticking to its offer of $69 per share. However, it is unclear how realistic that price tag is or how attractive it will be to shareholders, given that Genzyme has traded above that mark consistently since the acquisition news first hit the streets.

So, one prediction still seems to be holding out: That no one seems motivated to challenge sanofi and start a bidding war. What remains to be seen is whether sanofi will continue to hold fast on $69 per share as it picks at Genzyme’s defenses, or whether it will end up conceding to the opinion of many analysts and market watchers that a figure closer to $80 than to $70 will be needed to move either the leaders of Genzyme…or its stockholders.

Of course, there’s always the possibility that sanofi will simply move on to another castle, as Datamonitor  suggested in the article we ran in late August on this acquisition tale.

(By the way, with these latest developments, it might be a good time to cast a vote in our poll here if you haven’t already done so)


October 7, 2010 Posted by | Corporate, M&A activity | , , , , , | Leave a comment