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Genzyme and sanofi-aventis are getting closer

The folks at Bloomberg and the Wall Street Journal have their “inside sources” (I was never good at espionage), so we’ll let them tell you what’s going on with the continuing saga of sanofi-aventis trying to acquire a (so far) reluctant Genzyme.

Bloomberg:

Genzyme Corp. agreed to give Sanofi-Aventis SA access to confidential information, bringing the companies a step closer to a deal five months after the French drugmaker offered to buy Genzyme for $18.5 billion.

The companies may reach a deal in the next two weeks, said three people with knowledge of the situation who spoke on the condition of anonymity because the talks are private. The confidentiality pact means that Sanofi and Genzyme are aligned on broad terms, with Sanofi likely to slightly raise its $69-a- share offer, the people said. The French drugmaker may also make additional payments based on the success of a Genzyme experimental multiple sclerosis drug, the people said. The companies have yet to agree on final terms.

Wall Street Journal blog:

It Might Actually Happen: Genzyme and Sanofi-Aventis have agreed in principle to a deal and plan to nail down the details in the next week, though there is still no guarantee of a final agreement, the WSJ reports, citing people familiar with the situation. Genzyme has previously rejected Sanofi’s $69-per-share offer as too low and instead wanted something more like $80 to sell, but recently “the two sides have made significant progress in bridging the value gap,” the paper says.

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February 1, 2011 Posted by | Corporate, M&A activity | , , , , , | 1 Comment

Genzyme and sanofi continue on…and on…and

There is a good reason why professional arm wrestling isn’t a major television draw. For all the complaints of how boring baseball or golf is to watch, things do change and tides turn in dramatic fashion amid the slow portions. But watching two people with interlocked hands staring each other down while muscles bulge…until finally one opponent just loses the will or strength to continue?

No, not interesting to most people.

In many respects, the sanofi-aventis attempt to acquire Genzyme (whether by willing merger or takeover) is beginning to feel like arm wrestling. It’s only interesting if you’re one of the competitors. Or you have a bet placed.

So, in recent days, sanofi has once again invited Genzyme to come to the table and talk (see this story coming out of Boston, for example, or this one from the Wall Street Journal). Genzyme, in turn, has said “There’s not enough money on the table yet to convince us show up!” (I paraphrase wildly, of course). We’ve been held at a $69 per share offer so long, and the back-and-forth repetition from both sides as to why they won’t budge that…Zzzzzzz

Wha….! Huh?!!!!

Seriously, though, as repetitious as this is seeming, there are little gems of information and insight to be gleaned.

For one thing, despite inviting Genzyme to come back to the table after threatening to take them over, sanofi is still showing its assertive streak by warning the Cambridge, Mass.-based company not to turn to its state’s takeover protections and swallow the proverbial “poison pill” to fend off a hostile acquisition (see this Bloomberg story).

At one website where the latest overtures and refusals had been aired as news, a comment was posted that said, essentially: “Maybe it’s time for sanofi to walk away long enough for Genzyme’s shares to drop back into the 40s and then let Genzyme’s top brass explain the real value of their shares to the stockholders.”

I don’t know that I agree Genzyme isn’t worth more than $69 per share. Maybe it is, maybe it isn’t. But it is certain that the stock rose on the news of a sanofi merger (or takeover). The continued presence of sanofi as an eager suitor (or conqueror) doesn’t seem likely to drive down stock prices. One can only wonder whether with no rival suitors sanofi might be better off stepping away for a time. But then again, with the pressures Big Pharma is facing right now with patents expiring and pipelines being sluggish, perhaps sanofi can’t afford to do that.

It’s also worth putting the current situation into perspective relative to sanofi’s third-quarter earning report in late October. Commenting on those earnings, which were up 13 percent, analyst Simon King of Datamonitor wrote:

“Sanofi-Aventis’s increasing diversified business model is reaping rewards as growth across consumer, generic and vaccine divisions has helped to compensate for generic competition within the branded pharmaceutical segment. However, generic erosion continues to impact performance, driven in part by the somewhat unexpected approval of a generic Lovenox product. With Plavix sales also in decline due to loss of European patent exclusivity, Sanofi-Aventis’s anti-thrombotic empire is in collapse.

“These results occur against a backdrop of continued negotiation regarding Sanofi’s proposed acquisition of Genzyme. Sanofi has used its results announcement to launch its latest salvo towards Genzyme shareholders by suggesting that nothing has been said that will change its current offer. Genzyme though is now being very bullish in terms of sales forecasts – which will be heavily dependent on reversing the loss of sales to Shire in specialist markets and the success of Campath in multiple sclerosis.”

King notes that Genzyme’s stance could backfire, particularly if sanofi does decide to walk away and no other bidders emerge. However, he remains convinced that the Genzyme acquisition “fits the sanofi model.”

For now, it’s still an arm wrestling match. We’ll keep our eyes on it, and let you know who wins in the end…or if we get a draw.

(By the way, sanofi’s public announcement about the latest back and forth is here and Genzyme’s official take is here.)

November 9, 2010 Posted by | Corporate, M&A activity | , , , , , , | 1 Comment

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