Sanofi refuses to raise $18.5b offer for Genzyme
The top executive of French drugmaker Sanofi Aventis SA, refusing to budge from his $18.5 billion bid for Genzyme Corp., this morning unleashed a withering critique of the Cambridge biotechnology company's contention that it is worth about $89 a share, billions of dollars more than the $69 a share his company has offered.
"The bottom line is we didn't hear anything of substance (from Genzyme executives) that would cause us to change our offer," Viehbacher said on the conference call. The call followed Sanofi's third-quarter earnings report that topped analysts' forecasts as the company boosted its own guidance on full-year 2010 profits.
Viehbacher's remarks represented Sanofi's first response to Genzyme's presentation to investors in New York last Friday, in which the company sought to bolster its argument that the French company's bid undervalued Genzyme. Genzyme executives offered projections for 2011 that were well above Wall Street estimates and suggested that, based on those numbers and the factors Sanofi used to calculate its offer, the company would be worth closer to $22.7 billion.
Some analysts were skeptical of Genzyme's bullish outlook, however, and the company's shares have risen only modestly since Friday. "Really the voice of the market is most relevant," Viehbacher said. He added, "Keep in mind that Genzyme has lowered its earnings per share guidance several times over the last two years."
Genzyme vice president Bo Piela today defended Genzyme's earnings guidance, which company executives are reinforcing in meetings with investors across the country this week.
"We've provided our investors with very detailed information and expectations behind our financial assumptions," Piela said. "Those projections are very solid and our shareholders have welcomed them."
Viehbacher said Genzyme chief executive Henri A. Termeer and his top lieutenants seriously overestimated the initial market for alemtuzumab, a promising multiple sclerosis drug for which they expect Food and Drug administration approval next year. He also warned that Genzyme could lose more market share to rivals Shire plc of Ireland and Protalix Biotherapeutics of Israel if there is another manufacturing disruption at its Allston Landing plant in Boston before a new plant in Framingham comes on line next year to open a second production line.
"Quite honestly, it's going to shift the execution risk to us," Viehbacher said of Sanofi's proposed acquisition of Genzyme. Sanofi's bid has been rejected three times by Genzyme's board of directors.
Viehbacher also dismissed Genzyme's "probe" of other pharmaceutical and biotechnology company's, launched two weeks ago, that is seeking to better value the Cambridge company against its peers -- but could also result in a competing acquisition offer to Sanofi's.
"Any process that doesn't involve Sanofi, the only company that has made a full and fair offer for Genzyme, is not one that stands to benefit the company's shareholders," Viehbacher said.
In response to a question from a French stock analyst, Viehbacher wouldn't say under what circumstances Sanofi would walk away from its pursuit of Genzyme if a majority of investors don't tender their shares by Dec. 10.
"At some time, the shareholders will have a choice between going with some of the rosy forecasts out there and listening to management, or going with our cash offer," the Sanofi chief said.