Sanofi readies endgame M&A strategy in bid to wrap up Medivation takeover saga

sanofi HQ

After months and months of seeing its advances spurned by Medivation ($MDVN), Sanofi ($SNY) has spent the past few weeks working toward a potential deal under a confidentiality agreement with its target. From this new, potentially-less-adversarial negotiating position, Sanofi says it is ready to move quickly to get a deal done.

As it stands, Sanofi is one of multiple suitors that have entered into confidentiality agreements with Medivation. Pfizer ($PFE) and Celgene ($CELG) are reported to be among the other drugmakers kicking the tires ahead of a potential bid for Medivation, but, to date, Sanofi has been the most vocal about its desire to snag the biotech and its blockbuster prostate cancer drug Xtandi.

In pursuing its prey, Sanofi has riled Medivation on occasion--the biotech hit out against “misleading claims” and “coercive efforts” last month--but the French Big Pharma now thinks any bad blood can be forgotten, creating an environment in which the companies can hammer out terms.

“We have entered this new phase of our discussion with Medivation, which of course we expect will be much more productive,” Sanofi CEO Olivier Brandicourt said on a conference call attended by Bloomberg.

How this expected shift in the tone of negotiations affects Sanofi’s ability to get a deal done remains to be seen, but Brandicourt is preparing for the endgame. “There is no certainty in terms of timing but we are ready clearly to move quickly,” he said.

Brandicourt was speaking following the release of second-quarter results that reiterated why he is keen to mark the start of his time in charge of Sanofi with a sizable acquisition. Sanofi’s results once again highlighted the divide in the business, which resembles a fast-growing biotech burdened with a lumbering, underperforming pharma unit. Sales at Sanofi Genzyme were up 20%, but even this was insufficient to offset the ongoing difficulties of its diabetes business. In Paris, Sanofi shares fell 2%.

Buying Medivation would give Sanofi another blockbuster drug in Xtandi, plus a pipeline of products that could drive growth in the years to come. The value of Medivation’s pipeline is one of the sticking points in the negotiations. Medivation CEO David Hung has argued that talazoparib, a Phase III poly-ADP ribose polymerase (PARP) inhibitor, is positioned to be a big blockbuster worth far more than the $3-per-share CVR proposed by Sanofi.

The ability of Sanofi, or one of Medivation’s other suitors, to find a deal structure that closes the gap in perceptions of talazoparib’s value will go a long way to dictating whether the takeout happens. For its part, Sanofi is maintaining that, despite its hunger for a deal, it will walk away if Medivation pushes back too hard.

“I emphasize that we will remain financially disciplined throughout this process,” Brandicourt said, according to Reuters.

- read Bloomberg’s article
- here’s Reuterstake
- and Sanofi’s release

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