Thursday, October 21, 2010

Back to Genzyme & Sanofi-Aventis

It looks like Sanofi-Aventis (Ticker: SNY) has been busy doing some behind the scenes work in their acquisition of Genzyme. The Financial Times reported that Sanofi-Aventis has closed a $15 billion loan right after announcing their hostile takeover of Genzyme (Ticker: GENZ). It was reported that they were able to raise the money from the banks and close the loan in just 9 hours. The banks are stumbling over each other to get a piece of the action. Another interesting piece of info from the article was that there were rumors of another pharma looking to raise some serious $$$. This apparently prompted Sanofi-Aventis to move quickly in raising the cash, which prevents others potential bidders from using those same banks. I sense another bidder is sniffing at Genzyme.

Genzyme reported so so earnings yesterday and provided guidance for Q4. It looks like the company will earn about $4 next year and if you place a 19 multiple on it, you will come up with $76. Sanofi-Advents initial bid was based on a 19 multiple on Genzyme 2011 earnings. I think Sanofi-Aventis has to offer at least $76 to have a chance in getting Genzyme. Even at $76, I think Sanofi-Aventis will have a hard time in getting Genzyme. Tomorrow, Genzyme will present their 2011 views and make their case as to why the $69 tender is too low.


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