Genzyme Rejects Sanofi-Aventis Takeover Bid

Genzyme (GENZ) has turned down a buyout offer from French drugmaker Sanofi-Aventis (SNY), saying that the Oct. 4 bid of $69 per share -- or $18.5 billion -- "dramatically undervalues" it. The company is worth about 30% more, Genzyme CEO Henri Termeer said in a statement Friday.

While Sanofi-Aventis based its offer partly on analysts' earnings expectations, offering a price of 20 times the average earnings estimate, Genzyme on Friday said it expects higher 2011 earnings of $4.30 to $4.60 per share. The midpoint of that guidance, $4.45, multiplied by 20 equals $89 per share. Sanofi-Aventis's offer also doesn't take into account the company's increased share price, cost-cutting measures, product pipeline and growing sales and profit expectations, according to Genzyme's statement.

"Our board is unanimous in its view that the Sanofi-Aventis offer does not approach the real value of the company, nor does it reflect our financial recovery, the achievement of manufacturing and product-supply milestones, and the increasingly recognized commercial potential for alemtuzumab," Termeer said. The company's board rejected the Sanofi bid Oct. 7.

Earlier this week, Cambridge, Mass.-based Genzyme reported third-quarter net income that quadrupled from a year earlier to $69 million. Genzyme estimated Friday that it will triple earnings next year while growing its revenue about 25%.

Genzyme specializes in creating drugs for rare diseases. For example, it makes leukemia treatment alemtuzumab, as well as drugs that treat multiple sclerosis. Genzyme holds considerable appeal for a company like Sanofi-Aventis because five of Sanofi's eight best-selling drugs will lose their patent protection and face generic competition by 2012.

Genzyme shares rose 0.68% to close at $72.45 on Friday.

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Gumby

Why sell Genzyme while the biotechnology is still new and has yet to hit the saturation for many decades to come. Discoveries will be made that will fuel biotechnology growth. Big Pharma is obsolete ..

October 24 2010 at 1:53 PM Report abuse rate up rate down Reply
jkennedy806

Go back to the lab Sanofi, leave Genzyme alone. You foreginers are all the same, you come in steal US R&D and then destroy the innovation as well as lay off the hard working people who made it happen.

October 23 2010 at 9:52 AM Report abuse rate up rate down Reply