Genzyme snubs Sanofi, but investors might not

Get ready for months of news about a potential Sanofi-Aventis buyout of Genzyme. Sure, it looks like progress today: Sanofi has finally gone public with its offer and Genzyme announced its definite rejection of that bid; so the news is not just sources volleying in the media anymore. But with no rival bidder in sight, analysts say, it behooves Sanofi to drag out any eventual negotiations.

Even if Sanofi goes hostile, as CEO Christopher Viehbacher's letter to Genzyme hinted, the deal could take months and months to complete, if the French drugmaker sticks to its guns on price. So far, Sanofi is standing firm at $69 per share--though Viehbacher says the company is "reasonable" about negotiating. And it may continue to do so, some analysts say, despite the prevailing wisdom that the deal will get done with a mid-70s price.

As Karl Heinz Koch of Helvea tells Reuters, "What do you do as a shareholder if the stock's at $52.50 and you can sell at $69? You get rid of your shares. I don't think Sanofi (will) have to raise their offer much." And Harry Glorikian, of Scientia Advisors, told the Boston Globe, "Genzyme's hand could be forced. A shareholder might say, 'I'll take the $69. We've had some production problems, and we don't know what's around the corner.' If enough shareholders think it's a good deal, they've essentially sold the company.''

Of course, Genzyme's board says it considers the $69 offer "opportunistic." In his reply to Sanofi's "bear hug" letter, CEO Henri Termeer writes, "Without exception, each member of the Genzyme board believes this is not the right time to sell the company," adding that Sanofi's bid doesn't recognize the progress Genzyme has made toward fixing its manufacturing problems or the full potential for its experimental products. And plenty of folks staunchly believe that the deal won't go anywhere at less than $75 per share.

- read the Reuters story
- get more from Bloomberg
- check out the Boston Globe article
- see another take from Reuters

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