If you believe all the rumors and leaks, French pharmaceutical group Sanofi-Aventis (SNY) and U.S. biotechnology company Genzyme (GENZ) should have reached a merger agreement by now. Instead, investors are left wondering what exactly is preventing the two from reaching a deal.

As expected, on Wednesday, Sanofi-Aventis reported results that showed the impact of generics already on its top and bottom line. While sales inched up 0.5%, thanks to favorable currency movements, revenue from key drugs, including blood thinner Lovenox, cancer drug Taxotere, and anti-blood clotting treatment Plavix, were hit by generic competition. Sanofi lost more than $2.5 billion in sales to generics.

Sanofi further said it expects generic competition to accelerate next year, and forecast an earnings-per-share decline this year of between 5% and 10%.

A Deal Within Days?

Genzyme repeatedly rejected Sanofi's initial and only offer of $69-per-share last year, but the two companies have recently resumed discussions. Leaks to the media suggested they were converging on a $74-per-share price and contingent value right based on the performance of Genzyme's potential multiple sclerosis treatment, which would initially be worth $2 to $3 and could eventually be valued at $5 to $6. A deal, these sources said, would be reached within days.

But in the earnings call with analysts, CEO Chris Viehbacher said: "There is a timeline that has been put out there by people who shouldn't be talking to the press, and we don't really know what they are talking about." He reiterated that Sanofi is not going to spend shareholder money "frivolously" or "rapidly," but "make sure that we do that correctly."

With Genzyme's presence in 80 countries and 14 manufacturing plants, "Due diligence is not something you take lightly," Viehbacher added. He called the deal "strategically sensible and financially attractive," with "some very interesting synergies." He added, "The underlying dynamics [of Sanofi's business] are not going to change without something like a Genzyme transaction in 2012."

The financial results also made it clear how important the deal is to the Paris-based drug company. What isn't clear is why Sanofi hasn't been able to seal the deal yet. Is the French drug company being too cheap -- or has it discovered something during the due diligence of Genzyme's operations that caused it to pause? For the moment, however, the leaks seem to have stopped.

Interestingly, Goldman Sachs (GS), which is acting as one of Genzyme's financial advisers in the deal talks, reported a 6.8% stake in the Cambridge, Mass. biotech, making it the biggest shareholder of the company.

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GENZYME FELL TO 45 DUE TO MANUFACTURING SNAFU and Sanofi thouight they can swoop in and offer "premium" to Genzyme which was almost nonexistential.. GEnzyme was originally 80 and up before the manufacturing glitch that plummeted GENZ to 45. If Sanofi is really sincere about the premium offer, then GENZ is worth over 100 and up and it will be worth shareholder's time waiting for GENZ to get there . after three years, SAnoif can have GENZ onthe run for themselves. WE are not GONNA VOTE YESSIR TO SANOFI AT $69 OR $75 ETC. NO WAY, DUDE!

February 25 2011 at 3:41 PM Report abuse rate up rate down Reply

What Sanofi doesnt understand is that Genzyme share price is not going to be static one , three , ten years from now.. Thinking about grabbing Genzyme from shareholders now is a fantasy that will never come true.. Shareholders know better than to approve this deal.. VOTE NO!!!!!!!!!!!!!!!!

February 25 2011 at 3:38 PM Report abuse rate up rate down Reply

Genzyme has years of growth ahead .. why sell now? Because Warren Buffet want to steal Genzyme from you shareholders and put in his Berkshire Hathaways stock for those snotty rich freaky shareholders of Berkshire Hathaways!! Screw Warren Buffet ...kick him out of Egypt now!!

February 11 2011 at 2:10 PM Report abuse rate up rate down Reply

Warren Buffet got to go like Mubrakak of Egypt did... Warren Buffet is a cheapskate ***** head!!

February 11 2011 at 2:07 PM Report abuse rate up rate down Reply