Back when the news of Sanofi-Aventis' (NYSE: SNY) interest in Genzyme (NASDAQ: GENZ) broke, analysts and other industry observers were speculating about the prospect of a hostile bid. Word was that Genzyme management wasn't keen on the prospect of a buyout.
But now, given Genzyme's manufacturing woes--which could take up to four years to fix--Sanofi really needs access to the company's facilities and records, to make sure that the corrections can be made and completed on time, to avoid potential FDA fines.
With a hostile bid, Sanofi won't have that opportunity. "[I]t is very unlikely that Sanofi would pursue a hostile approach, blindly assuming all the risk," Barclays Capital analyst Michael Leuchten tells Bloomberg. "The company needs access to the books, manufacturing plants and correspondence with the FDA to do the appropriate due diligence."
No other bidders for Genzyme have emerged. As one analyst told the news service, the two companies are engaged in a "game of chicken" as they face off over price.
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ALSO: The potential buyout of Genzyme could be a boon for a pair of foreign-based competitors that have been aggressively marketing rival treatments to challenge Genzyme's lucrative enzyme replacement drugs. Report