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Genzyme shareholders face a dilemma – side with management or take sanofi’s cash?

Welcome back to the Medical Technology Blog. We start this week with company news involving sanofi-aventis and Genzyme, please read on…

sanofi-aventis has made yet another ambitious bid to become the owner of Genzyme, a successful global biotechnology firm based in Cambridge, MA, despite previous refusals from the latter. It is easy to see why ownership of Genzyme is appealing to sanofi; in 2010, Genzyme was listed in Fortune magazine’s top 500 US companies, and last year it posted revenues of US$4.5 billion. In the latest proposal, sanofi has issued Genzyme with a tender offer for all outstanding shares for US$69 per share, which values the company at US$18.5 billion. This new offer was unanimously approved by sanofi’s Board of Directors, and is set to expire on 10th December.

But Genzyme’s management team is yet to respond to the latest offer, and if sanofi’s previous bids are anything to go by, the global pharmaceutical company may be disappointed once again. At the beginning of September, sanofi submitted an unsolicited offer to acquire Genzyme in an all-cash transaction valued at approximately US$18.5 billion. Genzyme’s Board, however, dashed any hopes of a deal by issuing a unanimous rejection, on the basis that the deal was identical to a proposed offer that sanofi submitted in August, and held “no new information or improvement in price”. Since the latest offer also values Genzyme around the US$18.5 billion mark, it seems that the same reasons for rejection may also apply this time.

Genzyme’s management team believes that now is not the right time to sell the company, despite sanofi’s previous attempts to woo Genzyme shareholders by informing them of the “significant shareholder value and compelling strategic fit inherent in a combination of the two companies”. Genzyme, however, believes the “opportunistic” takeover proposal does not begin to recognise the significant progress under way to rectify the latter’s manufacturing challenges or the potential for its new product pipeline.

Thanks to Spohie Bracken for this article, Sophie is the the editor of Drug Delivery Insight and Orthopaedic Business at Espicom Business Intelligence.

If i was a betting man i’d probably put my money on a rejection, but what do i know, perhaps some of the stockbrokers that follow me on Twitter might like to comment?

All the best, come back soon, regards, Paul

Espicom Business Intelligence

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