Sanofi Aventis 'playing chicken' with Genzyme bid
Sep 03, 2010
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French drug-maker Sanofi Aventis has gone public with its interest in American biotech group Genzyme, tabling a $69 per share offer totalling $18.5bn. The bid places a 31% premium on Genzyme's shares. That's well below the 2008 peak of $83.25, after a disastrous year of manufacturing problems and plant contamination. CEO Henri Termeer rejected it as "unrealistic" and "opportunistic"; his Sanofi counterpart Chris Viehbacher accused him of stonewalling.
What the commentators said
Genzyme's claim that it is undervalued is another dose of "the usual rejection drivel", said Lex in the Financial Times. As for Sanofi Aventis being opportunistic, "why not?" After all, "Genzyme has been through hell" for most of the last year. With doubts remaining over whether Termeer can clear up its manufacturing and reputational problems, "Genzyme can't be too choosy… an opportunistic sale may not be a bad thing".
Viehbacher's public bid "may look like a step towards hostility", but it's actually "a game of chicken", said Pierre Briançon on Breakingviews. The lowball offer is a ploy to tempt the board to let Sanofi get a look at Genzyme's books. So far that seems to have failed, with the board unmoved.
The problem is that the price values Genzyme at about four time sales, while biotechs usually go at five or six times. That's "hardly going to bowl Genzyme's shareholders over". Sanofi could afford to pay more, but would rather do its due diligence first. So the best hope is that shareholders now pressure Genzyme into talks; activist investor Carl Icahn has already said that he's open to a deal that represents "fair value" for shareholders.
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