Sanofi hits up Medivation investors with 34 pages of fault-finding and promises

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In its latest salvo against recalcitrant management at buyout target Medivation, Sanofi takes aim at the biotech’s recent stock performance, financial results, R&D stumbles, pipeline predictions--even its data presented this week at ASCO.

The French drugmaker also says it’s aiming for quick action--it wants to replace Medivation’s board by August 1. And it once again suggests that it’s “confident” that it could sweeten its $9.4 billion bid, provided Medivation lets it check out the books. Significantly, even.

What will Medivation and its shareholders think about all this? The company hadn’t responded by press time. But with its heels dug in--and flirtations ongoing with potential white knights--it’s not likely that CEO David Hung and Medivation’s board will suddenly open the gates to a friendly deal.

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Of course, Medivation management isn’t Sanofi’s primary audience anymore. That would be the company’s shareholders. Those shareholders could theoretically pressure Medivation into opening its books to its would-be buyer; if enough top investors clamored for talks, Hung and Co. might be convinced.

Presuming that doesn’t happen, those shareholders will be called upon to vote in a consent solicitation. If the French drugmaker can persuade them to vote for its slate of 8 new directors, then it will have friendlier faces and, likely, a place at the dealmaking table. And in Wednesday’s deal apologia, posted on the company’s website, Sanofi once again maintains that Medivation shareholders are on board with its offer, citing “extensive conversations” with investors.

"Sanofi believes there is a clear path to completion” of that director vote by August 1, the Paris-based company said in a Wednesday press statement. The voting can’t get underway, however, until the drugmaker files final consent solicitation papers with the Securities and Exchange Commission.

Sanofi has hired Innisfree M&A to solicit votes, promising an up-front fee of $75,000, a $1 million fee after a that final consent solicitation hits the SEC, and a $150,000 bonus if the two companies make a deal. Innisfree is preparing to hire 50 staffers to make calls to individual investors, at $5.50 a pop, if necessary, according to a regulatory filing.

Those callers may have a tough job ahead: Cannacord analyst John Newman has said shareholders will likely turn up their noses at any bid below Medivation’s previous high of about $70, despite Sanofi’s arguments about comparable deals (Pfizer’s recent Anacor buy) and the not-so-pretty chart of Medivation’s stock performance over the last year.

All the reported interest from other Big Pharma and Big Biotech deal shoppers will no doubt sway investors as well. They might be content to wait for a white knight. Pfizer and Amgen have reportedly looked at Medivation’s books, and big names from AstraZeneca to Gilead Sciences are rumored to be in the hunt.

- see the Sanofi release
- get the investor presentation
- check out the latest SEC filing

Related Articles:
Most-wanted buyout target Medivation and hostile bidder Sanofi line up for board fight
Hostile Sanofi puts forth its slate of Medivation directors as Gilead, Celgene weigh their own bids
Medivation opens books to Pfizer, Amgen as bidders circle: Reuters
Undeterred by hostile threats, Medivation spurns Sanofi again
Sanofi ready to take over Medivation board if deal talks don't start
Pfizer approaches Sanofi target Medivation to talk takeover
Sanofi may spark a Medivation bidding war with $9.3B bid

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