The French drug giant Sanofi-Aventis’s quest to buy the struggling biotech Genzyme has officially turned ugly. This morning Sanofi (NYSE:SNY) went directly to the shareholders of Cambridge, MA-based Genzyme (NASDAQ:GENZ) with a tender offer of $69 per share, or $18.5 billion total, in a bid to seize control of the biotech company’s lucrative business of making drugs for rare diseases, according to Sanofi.
The hostile offer follows Genzyme’s statement in late August that its board of directors had unanimously rejected Sanofi’s earlier offer to buy the company; that bid was also at $69 per share. In the August 30 statement, Genzyme chairman and CEO Henri Termeer said that Sanofi’s offer undervalued Genzyme’s pipeline of drugs such as alemtuzumab (Campath), which is a cancer drug in late-stage development as a treatment for multiple sclerosis. People close to Genzyme told Xconomy last month that Termeer, who has been CEO of Genzyme since 1985, has no desire to sell the company.
In a letter to Termeer today, Sanofi CEO Chris Viehbacher said that his company has been unsuccessful in its attempts to have productive discussions with Genzyme about a merger. A meeting between the two companies on September 20 went nowhere, according to the letter. “Given your unwillingness to engage in constructive discussions with us,” Viehbacher said in the letter, “we had no choice but to commence a tender offer.”
Rumors began to circulate in media reports in early July that Sanofi had its eyes on buying a U.S. biotech company, and Genzyme became an immediate candidate. The 29-year-old company, which had $4.5 billion in 2009 revenue, specializes in making biotech drugs for rare diseases such as Gaucher’s and Fabry diseases. Yet the firm’s been mired for the past year and a half in supply shortages of its top drugs, following the discovery of viral contamination at its Allston Landing plant in June 2009 and temporary closure of the facility. The manufacturing problems left an opening for billionaire investor Carl Icahn to take control of two seats on the Genzyme board in June. Sanofi’s interest in buying Genzyme emerged in media reports in late July.
The price that Sanofi is willing to pay for Genzyme has been a subject of much speculation in the press and on Wall Street. Genzyme’s stock was trading at $71 per share as of 10:03 am Eastern time today, up 12 cents on the day. So investors are betting that Sanofi will boost its offer to acquire Genzyme. However, Viehbacher has been vocal about his reluctance to increase its offer without any competing bids, of which there have been none so far. Genzyme’s stock price has jumped about 38 percent from its $49.86 price on July 1, the day before speculation about Sanofi’s interest in buying a U.S. biotech company appeared in media reports, according to Sanofi.