Genzyme Corp. has said the company is not for sale to French drug maker Sanofi-Aventis for the price of $69 a share, confirming weeks of rumors that the two companies were in tense negotiations over a possible acquisition.
In a pair of letters released by the two companies, Sanofi over the weekend offered $18.5 billion in cash, or $69 a share, and this morning, Cambridge-based Genzyme said its board has already rejected it in a vote. Previous unconfirmed reports have indicated that Genzyme is looking for a price closer to $80 per share.
The exchange sets the stage for a potential hostile takeover, as Sanofi urges Genzyme to accept the offer, and Genzyme instructs shareholders of the next steps if Sanofi begins acquiring large numbers of shares.
Sanofi first made the bid in an letter dated July 29, and the offer was reiterated in a letter sent Sunday to Genzyme Chief Executive Henri Termeer, a copy of which the suitor made public.
Sanofi-Aventis said it sent the letter only “after several unsuccessful attempts to engage Genzyme’s management in discussions.”
“We are disappointed that you rejected our proposal on August 11 without discussing its substance with us,” Sanofi-Aventis CEO Christopher Viehbacher wrote. “After our repeated requests, you agreed only to let our respective financial advisors hold a meeting of limited scope. Our financial advisors finally met briefly on August 24, but the meeting simply served as further confirmation that as throughout you remain unwilling to have constructive discussions. As I have mentioned to you, we are committed to a transaction with Genzyme, and, therefore, we feel we are left with no choice but to take our compelling proposal directly to your shareholders by making its terms public.”
He added that he preferred to work with Genzyme’s management to come to a mutually agreeable deal.
The response sent back to Sanofi, from Genzyme CEO Henri Termeer is no less sharply worded.
His letter reads, “Without exception, each member of the Genzyme board believes this is not the right time to sell the company, because your opportunistic takeover proposal does not begin to recognize the significant progress underway to rectify our manufacturing challenges or the potential for our new-product pipeline.”
The letter says that the two letters from Sanofi offer identical deals and do not take into consideration progress the company has made, including upping the doses available for its two rare-disease drugs, whose supplies have been severely constrained due to ongoing manufacturing problems.
The Genzyme response goes on to say: “As you are well aware, our bankers met with your financial advisors on August 24, 2010, and provided very useful, non-public information regarding progress the company has made to meaningfully improve its manufacturing capacity, the tremendous future upside of our multiple sclerosis drug
alemtuzumab, and our outlook for significant cost reductions that will further drive our earnings growth."
In the letter, Genzyme officials say that Sanofi has indicated it would pay more for the company but would not “bid against itself.” No other potential bidder has come forward publicly, and none is named in the letters.
Genzyme's letter closes by saying that the company will not “ engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues our company."
Genzyme said if Sanofi tries to take over the company, it will send a recommendation statement urging shareholders to reject such a bid, per Securities and Exchange Commission guidelines.