US biotech Genzyme is selling off its diagnostics products business to Japan’s Sekisui Chemical Co for $265 million in cash, as part of a five-year plan to increase shareholder value.
The business provides critical raw materials and enzymes, clinical chemistry reagents, rapid tests and infectious disease products to manufacturers, clinical laboratories, distributors and healthcare providers, and generated revenues of around $167 million last year.
Under the terms of the deal, Sekisui will buy all of the assets of the business and has also agreed to offer jobs to the existing 575 or so employees upon closing, which is expected by year-end but subject to certain conditions such as antitrust clearance. The Japanese group also said it plans to maintain operations at all current sites.
From Genzyme’s point of view, the move falls under plans, announced in May this year, to shed three of its businesses as part of a five-part strategy to boost shareholder value. The company has already offloaded Genzyme Genetics to Laboratory Corporation of America, and still plans to divest its pharmaceuticals business unit, and it said it would consider using the proceeds to finance the second half of its $2 billion stock repurchase.
“With this transaction, we are continuing to execute on our plan to increase value for shareholders,” noted Henri Termeer, chairman and chief executive officer of Genzyme, and he said the sale "is part of our strategy to sharpen the company’s focus and allocate our resources to key areas for our future growth such as manufacturing, our rare disease business, and our product pipeline”.
Some might also see the move as a veiled message that Genzyme intends to stand firm on its rejection of an $18.5 billion buyout offer from French drugmaker sanofi-aventis, which the US biotech insists undervalues its business.
Genzyme’s board has unanimously rejected sanofi’s advances, but the French drugmaker has approached shareholders directly with a tender offer set to expire in December. Despite this, Genzyme’s leaders are reportedly seeking a white knight to help prevent the takeover, or possibly even a grey knight with a more enticing bid, and as such are believed to be in talks with Takeda and possibly even GlaxoSmithKline, according to media reports.