Could it be? Could one of the most protracted bid sagas in recent memory have lurched to its denouement?
News came on Wednesday morning that Sanofi-Aventis has finally clinched its deal to buy Genzyme after raising its offer to $20.1bn for the US biotech business. The deal follows what Lex called the “light bulb moment” for Genzyme’s board, and presumably ends nine months of on-again, off-again — and often acrimonious — negotiations. But it leaves analysts and investors wondering if it will all be worth it.
From Market Watch:
French pharmaceuticals major Sanofi-Aventis SA confirmed Wednesday it has struck a deal to buy U.S. peer Genzyme Corp. for a total of $20.1 billion in cash, along with a series of milestone payments.
In a joint statement, the companies confirmed the offer of $74 a share, which had been reported a day earlier by Reuters.
The boards of both companies have approved the deal, which is expected to close “early in the second quarter of 2011, subject to customary closing conditions,” the statement said.
The deal is anticipated to add to Sanofi’s earnings per share in the first year following closing, and will add €0.75 – €1.00 a share by 2013, it said.
The milestone payments are linked to the performance of the drugs Lemtrada (alemtuzumab MS), Cerezyme and Fabrazyme, the companies said …
The two sides aim to complete the transaction early in the second quarter. Earlier, the FT reported that Sanofi was set to finalise a revised offer of $74 a share with extra cash and a further “contingent value right” payable if Genzyme achieves agreed milestones on its experimental multiple sclerosis drug, such as regulatory approval.
The deal will help the French pharma group to strengthen its product range as it faces a series of patent expiries on existing so-called blockbusters. At the same time, the FT notes in a separate report, the deal will provide “an exit for Genzyme investors”:
The company has developed a profitable niche in selling high-priced treatments for “orphan diseases” that affect a small number of patients globally, but has suffered setbacks partly triggered by manufacturing problems and supply shortfalls that depressed its share price.
Sanofi warned last week that 2011 earnings were likely to be down by as much as 10 per cent from last year’s €7.06 ($9.68) a share, as a result of increased pricing pressure and threats from generic competition.
For Genzyme chief Henri Termeer, it could mean the end of a long career in which, as Bloomberg reports, the biotech pioneer transformed the company from a start- up into a drugmaker with $4.5bn in annual sales.
Termeer had done his utmost to raise the bid price, adds Bloomberg, even asking Genzyme’s bankers at Goldman Sachs and Credit Suisse to see if the company could fetch more from another bidder, according to an October filing, but none surfaced. Ultimately, as Lionel Melka, a Genzyme shareholder and co-director of Bernheim, Drefyfus & Co’s Synergy fund told the news agency, Genzyme had “no other option” – “no white knight ever emerged.”
The Source, meanwhile, highlights the big question undoubtedly on the minds of investors on both sides of the deal:
Are Genzyme investors getting as much as they could decently expect from their French suitors and has Sanofi boss Chris Viehbacher done enough to protect his shareholders from loss should Genzyme’s pipeline – the main reason for the deal – fail to perform?
Pharma industry blog Invivo has some views, saying:
Oh, we know that Genzyme provides Sanofi with access to a basket of lucrative marketed products, but these assets are also mature and facing competition from upstarts who have capitalized on the big biotech’s manufacturing missteps. At this undeniably rich price tag, how easy will it be for Sanofi to extract full value from the deal? Given the months of bitter back-and-forth, can the French pharma integrate Genzyme and retain important people like COO David Meeker and Senior VP, Quality, Ron Branning, who are essential to helping Sanofi make the big biotech a successful US subsidiary?
In all likelihood, it concludes, “it will be months before that assessment can be made”, and the answer will largely hinge on how Sanofi manages the integration of Genzyme.
Sanofi’s CEO Chris Viehbacher and his team would do well, in Invivo’s view, to look at recent past history – AstraZeneca/MedImmune, Roche/Genentech, Takeda/Millennium Pharmaceuticals – for some pointers.
Related links:
Drugs; Supply running low – FT
Sanofi and Genzyme get closer but don’t touch – FT
Sanofi buys Genzyme for more than $20bn - WSJ