Monday, October 04, 2010

Hostility from Sanofi-Aventis

Sanofi-Aventis (Ticker: SNY) went hostile on Genzyme (Ticker: GENZ) today, which was just a bit sooner than what I had expected. Let’s be real, no one with a brain cell will tender at $69. This is obviously a tactic to get Genzyme to open their mouths. Here’s a blurb from the tender offer filing that I found very interesting:

“Mr. Termeer remained unwilling to engage in constructive discussions in this regard or to provide his perspective on what he felt was an appropriate valuation of Genzyme. During the meeting, Mr. Termeer stated that he was in no hurry, the timing for a transaction was not right, and he suggested to Mr. Viehbacher that Parent withdraw its offer and consider reinitiating contact in 2011. Mr. Termeer further stated that he understood if Mr. Viehbacher felt he had to take more immediate action and launch a tender offer. Mr. Viehbacher explained that he was disappointed with Mr. Termeer’s unwillingness to engage in constructive discussions, particularly given the response of Genzyme’s shareholders, and that Parent was left with no choice but to take its proposal directly to Genzyme’s shareholders.”

Sanofi-Aventis was left with no choice, but to go hostile and this should have been no surprise to Genzyme. It’s interesting to note that Mr. Termeer wanted to wait until 2011 to engage in merger talks with Sanofi-Aventis. Obviously, he wanted the clinical results of Campath as leverage for a higher valuation for Genzyme. Unfortunately, time is not on Genzyme’s side. Sanofi-Aventis will raise the tender price to get the shareholders and managements attention. Sanofi-Aventis will get Genzyme before year end. We’ll hear from Genzyme in 10 days as to why shareholders should reject the tender.


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