Genzyme Pact Seems to Indicate $80 More Likely in Merger (GENZ, SNY)
Genzyme Corporation (NASDAQ: GENZ) is getting closer to capitulating to the offer to be acquired by Sanofi-Aventis (NYSE: SNY). At issue this morning is that Genzyme has agreed to open its books to Sanofi-Aventis. The two companies entered into a…
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Sanofi’s first formal offer of $69.00 was made back on August 29, 2010, and the company then took the tender off directly to Genzyme shareholders in early-October after Genzyme’s management team turned the offer down as being too-low and opportunistic. While some progress has been claimed, the general consensus is that Genzyme has been holding any details too close to the vest to draw a higher bid from Sanofi-Aventis. While the company was open to higher offers, no other bidders have emerged and the consensus inside the board room at Genzyme has been that $69 does not represent a point to even begin negotiations.
There is still no certainty that a pact will be reached. There have been discussions about contingency performance payments that could sweeten the merger terms in a contingent value right. Other potential terms have also been talked about without anything formal coming higher yet.
An agreement to enter a confidentiality pact helps in the thought of a merger. Genzyme will now allow Sanofi-Aventis to look at its cost structure and pricing, profit margins, supplier and customer pacts, supply contracts, customer orders, enhanced manufacturing plans, financial projections, marketing plans, and strategic alliances. Sanofi-Aventis has also agreed to a non-solicitation pact for Genzyme employees for at least 12 months for those employees encountered during the evaluation period.
Here is our prediction: a price of $72 will be offered and the final agreement may come to $75.00, with another $5.00 to $10.00 per shares potentially via a contingent value right. Deals like this are not routine when it comes to large public companies, but they are not without precedent.
Genzyme shares are up 2.5% at $72.87 and the stock hit a new 52-week high of $73.46. If you go back to 2008 before the bear market came into full swing, Genzyme shares briefly touched $80.00. Our take is that CEO Henri Termeer wants to deliver every single shareholder a gain as the capstone to his career in building Genzyme into a global biotech giant.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
