Sanofi-Aventis readies $18.7B bid for Genzyme

Genzyme (GENZ) is in play. After days of fevered speculation over what Genzyme would be worth to a company like Sanofi-Aventis, the big pharma outfit appears to have set its sights on the low side of the spectrum. According to a flurry of news reports, Sanofi CEO Chris Viehbacher and the board think that $70 a share--that's $18.7 billion total--would be a fair price to pay. But any bidding could start under that level. 

Significantly, Sanofi appears ready to move past the discussion stage and lay its cards out on the table in a formally presented letter which spells out its terms, Bloomberg reports, quoting "three people with knowledge of the situation." The New York Times, meanwhile, said that the pharma company would likely issue a "bear hug" letter, indicating it would like to keep the bidding process friendly but would go hostile if necessary - a ploy that could help win over some of the board members who have been on the fence in recent days.

Genzyme, though, isn't likely to leap at any $70 bid that comes its way. Market analysts have been quick to target $80 as a good premium over the current trade, which has soared 30 percent on the back of all the rumors that have been floating around.

"My guess is that Genzyme would turn them down," Cowen & Co's Phil Nadeau told the business news wire, "do some negotiations, and the price would go up a little bit, maybe to $73 or $75."  

True, Genzyme has been damaged by its recent manufacturing snafus, but that's unlikely to intimidate a player like Sanofi, which could use Genzyme's storehouse of biotech knowledge. And a rich M&A deal could be just the way Genzyme CEO Henri Termeer would like to cap his long-running career.

While Sanofi's board has been leaking like an old wooden ship, Viehbacher publicly is keeping a tight lip on the deal. "We are under no pressure to do a deal," Viehbacher told analysts on a call, vowing to stay disciplined on its M&A strategy.

- here's the story from Bloomberg
- here's the report from the New York Times
- here's the report from Reuters