US BIOTECH firm Genzyme has broken its five-week silence to reject an $18.5 billion takeover proposal by French drugmaker Sanofi-Aventis, dismissing it as opportunistic and too low.
Sanofi chief executive Chris Viehbacher confirmed his $69 a share non-binding cash offer for Genzyme on Sunday, hinting he could make a hostile takeover bid following several unsuccessful attempts to hold talks with Genzyme management.
Genzyme hit back yesterday, saying that Sanofi’s proposal showed no improvement in price since Mr Viehbacher first wrote to management in July and failed to form the basis for talks.
“The Genzyme board is not prepared to engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues the company,” Genzyme chief executive Henri Termeer said in a letter to Mr Viehbacher published yesterday.
Sources previously told Reuters that Genzyme wanted an offer of at least $75 a share before Sanofi could review its books. Some shareholders want as much as $80 a share to clinch a deal.
Genzyme said that Sanofi and its advisers claimed Sanofi was willing to pay more but that the company was unwilling to “bid against” itself.
The French group stopped short of making a direct approach to Genzyme shareholders on Sunday. Mr Viehbacher sounded a conciliatory tone in an interview with Les Echosnewspaper that nonetheless suggested there was a limit to his patience.
“We want to show that we are determined and serious, without being threatening straight away. Quite some time can go by yet,” Mr Viehbacher – dubbed the “Smiling Killer” by some staff for his cost-cutting zeal – said in the interview.
Genzyme shares were up 4.3 per cent to $70.55 in pre-market trade in New York, following its rejection of Sanofi’s offer.
Sanofi shares were up 0.9 per cent at €45.655, while the Stoxx 600 European health care index gained 0.7 per cent.
Mr Viehbacher said that disclosing Sanofi’s non-binding offer would give Genzyme shareholders a chance to see the “significant shareholder value and compelling strategic fit inherent in a combination of the two companies”.
Jefferies International analysts wrote: “There now seems to be a greater possibility of Sanofi-Aventis going hostile. We see Sanofi’s tactics to date as being good, weakening the Genzyme shareholder base already by blowing hot and cold via the press on a potential acquisition in the absence of any visible counter-bidder.”
Some analysts suggested Genzyme, which is trying to fix manufacturing problems that led to shortages of two of its top drugs and had hit its stock price, may not get a better offer and that a hostile bid by Sanofi could even be lower. – (Reuters)
