Sanofi-Aventis' ($SNY) lowball bid for Genzyme ($GENZ) is set to expire at midnight tonight. But does that mean the French drugmaker is throwing up its hands on the deal--or that it will go ahead and sweeten the offer? Not likely, analysts say; they expect the current bid to be extended by 50 days, giving the two companies time to think about adding milestone payments to the deal.
The Sanofi-Genzyme story has been dragging on for months, and now, promising to extend well into next year, is in danger of becoming a saga. Sanofi made a friendly foray at $69 per share and got rebuffed. Next, it went hostile with the same $69 bid, and Genzyme officials railed against it. Then, as both Genzyme and Sanofi touted their respective positions to investors, it became obvious that the big bone of contention was the prospective multiple sclerosis treatment Campath. Genzyme predicted $3.5 billion in peak sales; Sanofi pegged it at $700 million.
Enter the prospect of contingent value rights, or CVRs. They'd give Genzyme shareholders the chance to participate on Campath's upside, and give Sanofi some protection if the drug doesn't pan out as Genzyme predicts. Sources tell Reuters that Sanofi's not convinced, but analysts think CVRs could well be the compromise necessary to make the merger happen.