Genzyme rebuffs takeover bid, sources say; stock’s rise continues
NEW YORK — Genzyme Corp., the world’s largest maker of drugs for rare genetic diseases, rebuffed Sanofi-Aventis SA’s takeover approach last week, two people with knowledge of the matter said yesterday.
Genzyme, based in Cambridge, Mass., can command at least $22 billion, or $80 a share, on the potential for revenue to surge after the company resolves manufacturing defects that are depressing sales of existing products and introduces new medicines, investors and analysts said yesterday. That would be a 48 percent premium over Genzyme’s closing price last Tuesday, the day before reports of Sanofi’s interest.
Sanofi may send a formal letter to Genzyme detailing its interest in an acquisition as soon as this week, said a person with knowledge of the French drug maker’s plan. Genzyme’s revenue, $4.5 billion last year, can surge 47 percent to about $6.6 billion by 2013, said Geoff Porges, an analyst with Sanford C. Bernstein & Co. Investors will insist on at least $20 billion in a sale, said Sven Borho, with OrbiMed Advisors, holder of 2.5 million Genzyme shares.
“If two or three companies get involved in bidding, the $80s are achieved really easily,’’ Borho said. “There are so few good assets out there, and this is one of the more promising assets.’’
Genzyme shares rose 7.8 percent, or $4.86, to $67.38 yesterday, the second-biggest gain in the Standard & Poor’s 500 Index. That followed a 15 percent increase on Friday, after reports that Paris-based Sanofi had made an overture.
Spokesmen for the companies declined to comment yesterday.
Biogen Idec Inc., also of Cambridge, which had gained on speculation it was a potential takeover target, rose 8.3 percent to $57.89, the biggest gain in the S&P 500.
London-based GlaxoSmithKline PLC recently made a “very casual’’ overture to Genzyme, asking the biotechnology company to keep it in mind if Genzyme considered selling itself, The Wall Street Journal reported, without naming the source. Glaxo declined to comment. Sanofi does not expect competing bids, said the person with knowledge of the French drug maker’s plan.
Sanofi’s chief executive, Chris Viehbacher, is counting on acquisitions to help replace revenue the company is losing as its medicines face competition from lower-priced generic drugs. Sanofi has spent about $17 billion on 25 acquisitions since Viehbacher joined the company in 2008, according to data compiled by Bloomberg.
Genzyme’s chief executive, Henri Termeer, said on June 14 that the company was not for sale. It is focused on fixing manufacturing defects that cut into sales, Termeer said. Sales slumped 2 percent to $4.5 billion last year, following a virus contamination at Genzyme’s Allston Landing factory in Boston.
Genzyme has said it will spin off three units. Sanofi may have reviewed those units and decided to buy the whole company and restructure it, Porges said. Activist investors including billionaire Carl C. Icahn and Ralph Whitworth will probably push for a sale, he said.
