Sanofi launches hostile $18.5b bid for Genzyme

Tuesday, 5 October 2010 22:59 - - {{hitsCtrl.values.hits}}

Paris (Reuters): France’s Sanofi-Aventis launched an $18.5 billion (£11.688 billion) hostile bid for Genzyme, offering $69 per share directly to investors and raising pressure on the U.S. biotech to start negotiations.

Sanofi will eventually have to raise its offer, already rejected by Genzyme a month ago, investors and analysts said after the tender offer was announced on Monday.

Sanofi Chief Executive Chris Viehbacher said he would prefer to hold friendly talks, but was repeatedly rebuffed by Genzyme CEO Henri Termeer over several months of trying to discuss a deal. The all-cash offer expires on December 10.

“Sanofi-Aventis has a history of being a patient, disciplined buyer,” Viehbacher told reporters. “We believe the offer will be successful ultimately.”

“I am pretty sure they will not get it at $69,” said a fund manager at one of the top 10 largest mutual funds invested in Genzyme, adding that Sanofi could still make a deal pay at $80.

“This is the first step in saying we’re going to do this one way or the other. Clearly, $69 is just the opening bid,” said Jon LeCroy, an analyst with Hapoalim Securities.

Viehbacher wants Genzyme to boost Sanofi’s drug portfolio as sales of older medicines decline.

The offer could go higher if Genzyme management provided more information on its business, such as its recovery from a manufacturing crisis and the potential for an experimental multiple sclerosis drug, Campath.

“If someone helped us to understand where there is more value, we would be prepared to consider it,” Viehbacher said.

Genzyme, a maker of costly drugs to treat rare diseases, urged investors to take no action, saying it would review the offer and advise on its formal position within 10 days.

The U.S. biotechnology company’s biggest shareholders include activist investors Relational Investors and Carl Icahn. Both have representatives on Genzyme’s board.

Viehbacher has been courting Genzyme since May 23, when he first spoke to Termeer to discuss a potential transaction, according to a Sanofi regulatory filing.

Termeer asked to postpone the discussions twice as he fended off a proxy battle with Icahn and convened a new board, then responded in July that Genzyme’s directors didn’t believe it was the right time to explore a deal, according to the filing.