By now, you've read articles in WSJ, in-Pharma Technologist, Pharmalot or elsewhere that Genzyme has received a "bear hug" letter from Sanofi's CEO Chris Viehbacher. Read more in the PharmTech Talk blog below. It appears Sanofi will go directly to the Genzyme shareholders to pressure its management for a deal or may even escalate proceedings to a hostile takeover situation should that not work. We'll see.
PharmTech Talk » Sanofi’s Courtship of Genzyme in Limbo.
Derek Low also posted on this topic this morning in his In the Pipeline blog - entitled "How about the same price you turned down before? Hmm?" One might wonder why Sanofi would go back to Genzyme with the same $69/share price offered back in a letter on July 29th to the Genzyme board. The answer came to me from the History Channel. It's really quite simple.
I've become addicted in past month watching "American Pickers" and "Pawn Stars". Both are shows with an eccentric cast of real-life characters who buy things - buy assets. Pickers find their rusty, dusty, hidden treasures in barns, outbuildings, old churches and factories throughout the MidWest and South. Pawn Stars operate in the only slightly less glamorous confines off the Las Vegas strip. Both have something else in common - they only buy what they believe they can make a profit on! Yes. No matter how intriguing or "neat" the item, you are limited in the price you can afford to pay for it by the price you can get selling it - and thus turn a profit.
So it hit me, between Derek's post and this article from Expatica explaining that Viehbacher is in no hurry to speed the Genzyme deal to an unworkable conclusion. Sanofi can only afford to pay as much as will allow it to earn a profit for its shareholders! What a concept? The assets, products and pipeline from Genzyme need to support its sales price. It's pretty simple isn't it. Just ask Pickers and Pawn Stars. By the way, there is another similarity here - the Sanofi offer is an all cash deal - for $18.5 B.
However, at this writing, the WSJ and Xconomy reports that Genzyme has formally rejected today's offer from Sanofi and is holding out for its $80/share ask price.
Posted by Bruce Lehr August 30th 2010.
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