Genzyme and Sanofi Getting Friendly

Now that both Sanofi-Aventis (Ticker: SNY) and Genzyme (Ticker: GENZ) have officially gone public with their respective statements, I get a very good vibe that a deal will happen. In an interview with Reuters today, Henri Termeer, Genzyme’s CEO, stated: “we need each other too much in terms of future value” and there was a “high probability” that a deal would eventually be consummated (direct quote from Reuters). There’s no doubt now that the companies will get together and start negotiating on friendly terms. I also believe there are other companies on the side lines ready to make bids once the serious negotiation starts.

Sanofi Tries to Give Genzyme a Hug

Sanofi-Aventis (Ticker: SNY) just wants a small hug, but Genzyme (Ticker: GENZ) turns its back on Sanofi. It’s a cat and mouse game, but I believe Sanofi will eventually get its hand on Genzyme. Like I mentioned before, I see a minimal price for Genzyme in the high 70’s and would not be surprised to see a bid in the 80’s. A recent Merrill Lynch report from 8/30/10 showed that a $75 bid for Genzyme would create a 13.5% EPS accretion in 2013 for Sanofi. If the bid goes > $80 for Genzyme, that’s when it “would lack financial benefit to Sanofi shareholders…” This comes down to the time value of money. If Sanofi walks away, Genzyme will drop into the 50’s. The big question mark is the phase 3 results of Campath for MS, which is scheduled to be released in 2011. Positive clinical result for Campath can easily boost Genzyme shares into $90 +. Do you want to wait and risk it? Do you want to play it safe by taking the $$$ and hopefully generate a higher return with the cash? Those are some questions to consider… But obviously, we all need to see what Sanofi will really offer before answering any of those questions.

Free Money...

NOT!!! I can't believe these scams are still around. I got this junk in my email. If only making $$$ was this easy...

-------------------------------------------------------------------------------------

Dear e-MAIL Winner,
Your email address won £850,000.00 GBP in this month NATIONAL LOTTERY E-mail online drew.
To file for your claim, contact our Claims Officer Mr. Rafael Marshal with
the details below(Full Names, Contact Address, Country, Age, Sex, Occupation &
Telephone numbers) to this Email:claimsdepartmentnluk2010@live.com
Phone Number: Tel:+44 702 407 0548

MODE OF PAYMENT !!!

Option (1) Via Courier Delivery

Option (2) Via Bank Wire Transfer

Note: This is an automatic message do not click on your reply
button send all details to the below Email:claimsdepartmentnluk2010@live.com

Yours Sincerely,
Kevin Allison
(Web-Email Information Manager)

Sanofi Needs to Move Soon on Genzyme

The window is starting to close on Sanofi (Ticker: SNY) with the news from Genzyme (Ticker: GENZ) today that patients will return to full doses of Cerezyme starting in September. Fabrazyme is also starting to ramp up and should be able to meet all demand by Q1 2011. This is very positive news for Genzyme and I sense that Sanofi will make its move quickly before there’s more good news from Genzyme. From various news reports, it appears that Sanofi is getting ready to go hostile. This may be the only option for Sanofi at this point if they really want Genzyme.

Genzyme Update

Ok now with an update on Genzyme (Ticker: GENZ)… I’ve been adding to my Genzyme position and like Potash (Ticker: POT), I see this as a very good risk reward opportunity. I have to agree with many observers that the lack of news from either parties means that some sort of talk is under way. You can bet that if progress was not being made, someone will be leaking out some news. I eventually see Genzyme going to Sanofi (Ticker: SNY) in the high 70’s at the very very minimal.

Sanofi is trying to get Genzyme on the cheap because of the manufacturing problems at its Allston facility. There was a good point from one of the analysts stating that all of manufacturing due diligence has been completed for Sanofi by the FDA. This didn’t occur to me, but I have to agree with that assessment. Sanofi has public access to all of the 483s from the warning letter. Both the FDA and Quantic will be keeping a close eye on Allston to make sure it’s in line. Sanofi won’t have to do a thing… Manufacturing problems will always get fixed and there’s no doubt that Allston’s issues will be resolved.

I don’t see Sanofi dragging the talks out too long. The longer the talks drag out, the stronger Genzyme gets. Genzyme is getting stronger day by day and should be able to supply 100% of the Cerezyme market in Q4. Fabrazyme still has some work to do, but that too should be improving. Campath will be reporting phase 3 results in 2011 and this is being over looked by many observers. Campath has the potential to transform the MS market and turn Campath into a multibillion dollar product. Genzyme can no doubt survive this manufacturing blip. The question is do you want the money now or wait for some potential larger gains down the road. I’ll take the money now… As they say, "Time Is Money".

Some More POT

More Potash Corp. of Saskatchewan (Ticker: POT) that is... I’ve added to my Potash position today at $146.75. I really like the risk reward profile in this potential risk arb play. Today’s market sell off was a good opportunity to add to the position. I still see anything under $150 as a decent entry point.

I continue to hold tight to my Genzyme (Ticker: GENZ) shares. I’ll be doing a write up on that shortly…

Some Potash

What’s up with all of this sudden M&A activity? I couldn’t help, but get my hands on some Potash Corp. of Saskatchewan (Ticker: POT). Yesterday, news came out that Potash rejected a $130 per share offer from BHP Billiton (Ticker: BHP), an Australian mining company. Today, BHP went hostile with an offer of $130 per share for Potash. I was in Potash many many years ago and know a bit about the company. In an up cycle, the earnings power of this company is explosive. We’re just in the beginning of an agriculture up cycle and BHP is trying to get this company on the cheap. I picked up some Potash this morning at $145.85. Many analysts are looking at an eventual take out price of $170 +, which I believe is very reasonable for both Potash and BHP shareholders.

My Thought On Genzyme + Sanofi-Aventis

The potential acquisition of Genzyme by Sanofi-Aventis reminds me of Anheuser-Busch’s takeover by Belgium’s InBev. Anheuser-Busch did not want to get taken over and resisted hard at first. It took some time and Anheuser-Busch eventually agreed to be acquired by InBev in a “friendly” deal. I see this same scenario playing out with Genzyme + Sanofi-Aventis. If Genzyme does not agree to a “friendly” deal with Sanofi-Aventis, then it will be gloves off at Sanofi-Aventis and they will go hostile. What can Genzyme do? Not much, shareholders will force Genzyme management to eventually sell out to Sanofi-Aventis or the highest bidder. It’s just a matter of time…

Genzyme + Sanofi Lawyers for Hire?

A lot of people are expecting a quick deal in the Sanofi Aventis (Ticker: SNY) + Genzyme (Ticker: GENZ) saga, but it's going to take time. I believe something will happen and one needs to be patient. Both Sanofi Aventis + Genzyme have have their M&A lawyers in place and the serious wheel & dealing will take place shortly. Here's a good article from The Am Law Review:

-------------------------------------------------------------------------------------

Who's Getting the Work on the Sanofi-Genzyme Talks?

Posted by Zach Lowe

The talks between Sanofi-Aventis and Genzyme are just starting, but the law firm lineup is coming together, according to two sources familiar with the matter. And the names of the firms on this potential $21 billion deal won't surprise folks who have followed these companies for a long time.

Let's start with Sanofi, the French giant which has sent a letter to Genzyme's board outlining an offer that would pay Genzyme shareholders between $67 and $70 per share--a deal that would value the Cambridge, Mass.-based company at about $18 billion, according to The New York Times and Bloomberg. Weil, Gotshal & Manges and Wachtell, Lipton, Rosen & Katz have both nailed roles representing Sanofi in the deal talks, according to two sources familiar with the matter. Neither is a huge surprise. A team from Weil advised Sanofi late last year on its $1.9 billion acquisition of the consumer products company Chattem, according to our prior reporting. The firm's antitrust team is also advising Sanofi on its move to form a new animal health joint venture with Merck. Key Weil partners on those matters declined to comment or did not return calls.

Wachtell, meanwhile, was around for the creation of Sanofi-Aventis in 2004, when the firm advised the company then known as Sanofi Synthélabo on its $68 billion acquisition of Aventis. (The American Lawyer named Wachtell's David Katz one of its Dealmakers of the Year for his work on that deal. Katz declined to comment on the Genzyme matter.)

Genzyme has reached out to Ropes & Gray for work on the Sanofi talks, though there may be other firms involved on the Genzyme side as well, according to one source. Ropes has represented Genzyme before, including last year on Genzyme's acquisition of the rights to three cancer drugs from Bayer, according to our prior reporting. Ropes partners who have worked with Genzyme either declined to comment or did not return comment.

Neither company has officially acknowledged the talks yet, and the NYT says other bidders might emerge for Genzyme, which is likely holding out for a deal that values that company at about $80 per share.