The gloves are off this morning as Sanofi-Aventis has launched a hostile bid for Genzyme Corp at the same price as the one rejected by the US biotechnology major in August.
The French drugmaker is offering $69 per share in cash, which values Genzyme at around $18.50 billion. The offer is scheduled to expire on December 10.
Sanofi said its "strong preference is to engage in constructive discussions with Genzyme" but a meeting between the two chief executives on September 20 "proved unproductive, despite several attempts by Sanofi to advance discussions". The Paris-headquartered firm said that its executives met recently with shareholders who collectively own more than 50% of Genzyme's outstanding shares and the conversations revealed that they were "frustrated with Genzyme's persistent refusal to have meaningful discussions" regarding the proposal.
Sanofi chief executive Chris Viehbacher said the offer reflects "both Genzyme's upside potential and its current operational challenges". His firm has gone hostile, he said, because despite efforts to reach "a mutually agreeable transaction...our attempts to do so have been blocked at every turn".
In a letter to his counterpart at Genzyme, Henri Termeer, Mr Viehbacher added that "your continued refusal to engage with us in a constructive manner is denying your shareholders an opportunity to receive a substantial premium, to realise immediate liquidity, and to protect against the risks associated with Genzyme's business and operations". The offer represents a premium of 38% over the latter's share price on July 1, the day prior to press speculation regarding Sanofi's acquisition plans for a large US biotech.
Mr Viehbacher goes on to say that "in an effort to advance our discussions, I shared a very narrow information request focused on confirming your anticipated manufacturing recovery". He adds that "even though we and the market have analysed and assessed the prospects for alemtuzumab", Genzyme's Campath which is being investigated for multiple sclerosis, "you were unwilling to pursue either of these or any other path forward". It is claimed that Mr Termeer was "unwilling to provide us with your perspective on an appropriate valuation for Genzyme".
Genzyme, which is thought to be looking for around $72-$75, has yet to respond but expect a flurry of letters between the two sides.