Will Sanofi's 'discipline' work on Genzyme?

Sanofi-Aventis ($SNY) chief Christopher Viehbacher (photo) has kept his poker face on for months. Ever since rumors of a Genzyme ($GENZ) offer surfaced this summer, Viehbacher has stuck to his guns, refusing to raise the initial $69-per-share hostile bid, even when those refusals appeared increasingly bull-headed. He said he'd be "patient" and "disciplined" about the possible deal. He didn't seem worried that another company would sweep in with a rival bid.

Well, that strategy may end up paying off. Sources are telling the Wall Street Journal that Genzyme has relaxed its no-way-no-how stance. The company has scouted around for other potential buyers--such as Johnson & Johnson and Pfizer--but that search hasn't turned up a competitive offer, so it's more willing to talk, those sources said.

The two sides are tossing around the idea of contingent value rights, essentially a way for Sanofi to reward Genzyme shareholders with milestone payments if the prospective multiple sclerosis drug Campath pays off in the big way Genzyme now predicts. Analysts still think Sanofi will have to hike its initial offer somewhat, but if Genzyme gives a little, then maybe Viehbacher will be ready to play the game.

- read the WSJ piece
- get more from the WSJ Deal Journal

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