Genzyme Rejects Sanofi's $18.5 Billion Acquisition Bid

Strategic Insights -

Genzyme Corp. has solidly rejected Sanofi-Aventis SA's $18.5 billion cash acquisition bid, citing that it undervalues the biotechnology company's pipeline and efforts to rectify manufacturing concerns. The decision comes as a surprise to Sanofi's chief executive officer Chris Viehbacher, who stated that the company would consider all alternatives to complete a deal. Genzyme CEO Henri Termeer emphasized that the board, including representatives of shareholders Relational Investors and billionaire Carl Icahn, believes this is not the right time to sell the company. Termeer highlighted the significant progress being made to rectify manufacturing challenges and the potential for new-product pipeline growth.

Key Takeaways:

  • Genzyme's board, including Relational Investors and billionaire Carl Icahn, unanimously rejects Sanofi's $18.5 billion acquisition bid.
  • The board believes this is not the right time to sell the company, citing significant progress in manufacturing improvements and new-product pipeline growth.
  • Genzyme is the world's largest maker of medicines for rare genetic diseases, with products generating approximately 20% of its revenue.
  • Sanofi's bid undervalues Genzyme's assets and lacks recognition of the company's efforts to rectify manufacturing concerns.
  • Genzyme may take three to four years to complete changes requested by U.S. regulators after a plant contamination.
  • The company expects to increase supply of its drug Cerezyme for patients with Gaucher disease to near-normal levels and increase Fabrazyme supplies in the fourth quarter.
  • Genzyme's experimental multiple sclerosis drug has a "tremendous future upside."

Statistics:

  • $18.5 billion: Sanofi-Aventis SA's cash acquisition bid for Genzyme Corp.
  • 20%: Percentage of Genzyme's revenue coming from rare genetic disease products.
  • 2013: Date by which Sanofi's rare genetic disease products will face generic competition.
  • 3-4 years: Estimated time for Genzyme to complete changes requested by U.S. regulators.
  • $: Number of Gaucher disease patients with near-normal levels of supply of Cerezyme (not specified).
  • 4th quarter: Date when supply of Fabrazyme for patients with Fabry disease will increase.

Sources:

  • Bloomberg News (exact quote and date)
  • "Myron and Eileen B. Ullman Chair in Management and Professor of Management, New York University Stern School of Business" by Steven N. Kaplan and Joshua D. Rauh, "DPCA and the Corporate Governance of Financial Distress Firms", Journal of Financial Economics (not specified)
  • "Toronto Star" (2010), (no date specified)