Sanofi-Aventis Extends Its Tender Offer for Genzyme
As of Dec. 10, approximately 2.2 million shares of Genzyme were tendered and not withdrawn, representing approximately 0.9% of the outstanding shares -- barely scratching the surface since Sanofi launched the hostile bid in October.
The two companies seem to be at an impass where Sanofi says it won't raise its offer before any talks begin, while Genzyme maintains the $69 a share offer is "opportunistic" and "unrealistic," and that it basically won't entertain Sanofi before a more serious offer is on the table.
"Contingent Value Rights" May Be Key
Genzyme's shares have been trading mostly above $70 ever since news of the offer was made public in July. Analysts said repeatedly they believe Genzyme would go for a between $75 and $80 a share.
One possibility is that this extension would allow the companies to discuss "contingent value rights" (CVR), where Genzyme investors would be compensated based on future performance. Genzyme CEO Henry Termeer said last month he was open to CVR for Campath, Reuters reported.
Genzyme has experienced problems at its Allstom plant the past year, causing sales and profit to slump. But the biotech still holds considerable appeal for a company like Sanofi-Aventis, which is facing a major patent cliff: Five of its eight best-selling drugs will lose patent protection and face generic competition by 2012. While Genzyme could help Sanofi offset lost sales and boost its weak biotech division, so far CEO Chris Viehbacher appears to be in no hurry and believes time is on his side.