Sanofi was prepared to dump a quarter of its holding in Translate Bio in April—which the mRNA biotech agreed to. So how, exactly, did the French pharma end up buying Translate for $3.2 billion two weeks ago?
Under-the-hood details of the deal were revealed in a Securities and Exchange Commission filing disclosed by Translate Monday. The docs reveal how Sanofi's waning interest in the biotech turned into a billion-dollar deal.
The partners had not even discussed the possibility of an acquisition in April. Yet, five weeks later on May 28, Sanofi CEO Paul Hudson rang Translate CEO Ronald Renaud to alert him of an acquisition proposal letter that the drugmaker's chief financial officer wound up sending later that day. That initial offer? $28 per share. In cash.
Remember that number.
Translate's board rejected Sanofi's offer in early June because they thought a higher premium could be garnered via a different acquirer. Three other unnamed pharmaceutical partners begged to differ when Translate's team reached out. Companies B, C and D weren't even interested in engaging in discussions, let alone making an offer.
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On June 15, Sanofi countered with a $32 per share offer. A day later, Translate's board said they were interested, but only if Sanofi made an offer of at least $40 per share.
A week later, Sanofi moved to cut off discussions, given Translate's high request. But that blockade was short-lived, as the two companies continued negotiations, eventually settling on $38 per share. The deal was ultimately announced on August 3, and Sanofi has now commenced the merger agreement as of Monday, Aug. 16.
Sanofi has piled plenty of dollars into Translate over the years. The drugmaker handed over $45 million upfront to team up in 2018 and then dished out a further $425 million in the early months of the COVID-19 pandemic to expand the pact. Sanofi was clearly eyeing Translate's mRNA tech as competitors helped prove the technology through the COVID-19 vaccines.
Sanofi has been bulking up in mRNA after losing out in the race to develop a COVID-19 vaccine early on. The pharmaceutical giant is making sure they're ready for the next generation of the technology, however, with the Translate acquisition and the reallocation of $476 million a year for a new mRNA Center of Excellence.
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The pandemic itself was one of the key reasons Translate decided to sign on the dotted line for the $38 per share deal with Sanofi. The uncertainties around the global outbreak were potential risks to remaining an independent company. Impacts on global economies, potential disruptions to the supply chain and partner interactions, clinical trial delays and other third-party limitations were all noted in the SEC filing.
If companies B through D do, however, want to put up a superior offer, Translate can entertain them for the low, low price of $96 million in termination fees.