French company Sanofi-Aventis, the world’s fourth-largest prescription drugmaker, is looking to buy US-based biotech giant and rare disease treatment specialist Genzyme. But Genzyme rejected S-A’s $18.5B offer, meaning that negotiations for the mega-merger may drag out. FiercePharma’s Tracy Staton sums up the situation:
Even if Sanofi goes hostile, as CEO Christopher Viehbacher’s letter to Genzyme hinted, the deal could take months and months to complete, if the French drugmaker sticks to its guns on price. So far, Sanofi is standing firm at $69 per share–though Viehbacher says the company is “reasonable” about negotiating. And it may continue to do so, some analysts say, despite the prevailing wisdom that the deal will get done with a mid-70s price.
As Karl Heinz Koch of Helvea tells Reuters, “What do you do as a shareholder if the stock’s at $52.50 and you can sell at $69? You get rid of your shares. I don’t think Sanofi (will) have to raise their offer much.” And Harry Glorikian, of Scientia Advisors, told the Boston Globe, “Genzyme’s hand could be forced. A shareholder might say, ‘I’ll take the $69. We’ve had some production problems, and we don’t know what’s around the corner.’ If enough shareholders think it’s a good deal, they’ve essentially sold the company.”
Here’s what the companies’ CEOs have to say about the situation (MarketWatch):
“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 our company,” Genzyme Chief Executive Henri Termeer said in a letter to Sanofi-Aventis.
“We are going to be disciplined and disciplined means that we have a value in mind,” said Chief Executive Christopher A. Viehbacher. “I am not prepared to go to any lengths to acquire the company.”