Sanofi-Genzyme takeover bid gets heated

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It's been a busy morning with Sanofi-Aventis-Genzyme news. According to news reports, Sanofi is denying suggestions by Genzyme that it privately offered a higher price for the Cambridge, MA-based biotech, and what started off as a seemingly friendly takeover proposition is now descending into what Reuters calls "an ill-tempered stand-off."

Earlier this week, Sanofi went hostile, taking its offer straight to shareholders, but stuck with its original $69 per share bid. Sanofi's board is reportedly considering an increase in the bid.

Yesterday, Genzyme turned down Sanofi's $69-a-share hostile tender offer. "The Company Board remains unanimously resolute in its belief that the $69.00 per Share Offer Price continues to be inadequate and opportunistic, fails to recognize the Company's plan for substantial value creation, substantially undervalues the Company relative to its intrinsic value and is not in the best interests of Genzyme or its shareholders," the company says in a filing. To show board unity, the company signaled that Carl Icahn and Ralph Whitworth, two shareholder activists represented on its board, backed rejection of the offer, the Boston Globe notes.

In the same filing, Genzyme says a meeting between the two CEOs of the companies--Genzyme's Henri Termeer (photo) and Sanofi's Chris Viehbacher (photo)--took place Sept. 20. During the meeting, Viehbacher asked Termeer to provide a price range at which a deal could be consummated and proposed that the parties agree to $69 to $80 per share, Genzyme says in its filing. Termeer declined to agree to Viehbacher's proposal or to suggest any other price range, but instead discussed at length the intrinsic value of the company. Viehbacher, according to Genzyme, repeatedly said that his proposed price range was manageable, but, based on his current understanding, he could not get to $80 per share.

However, Sanofi is denying that it put such an offer on the table. "We strongly disagree with Genzyme's characterization of the September 20 meeting between the CEOs," Sanofi spokesman Jean-Marc Podvin says. "At that meeting we made a variety of efforts to move the process forwards, including discussing the merits of our $69 per share offer and we tried to understand if media reports about Genzyme's price expectations were accurate," Sanofi's spokesman adds, according to Reuters.

A source familiar with the discussions said Sanofi could sit back and wait until the Dec. 10 expiration date of its offer, hoping Genzyme or its shareholders lose their nerve, Reuters adds.

Analysts say the public haggling is a further sign of tensions between the two companies that points to a longer process for an eventual deal than previously expected, Dow Jones notes. "Judging from this and previous statements from each side, we won't see a solution to this any time soon," says Jeremy Batstone-Carr, analyst with Charles Stanley, adding "This 'war of words' is likely to continue into the first quarter of next year."

- read the Genzyme filing
- get more from Reuters
-
see the Boston Globe's coverage
- check out the Dow Jones report

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