Seeking Alpha's Chad Brand has put a different spin on the protracted Sanofi-Genzyme negotiations. He simply asks if it is worth it for a Genzyme shareholder to hang onto the stock hoping for higher Sanofi offer versus selling it NOW in the market range of $71-72 per share?
Interesting. Most shareholders at present seem to be holding the stock waiting for Genzyme's board to ratchet up Sanofi's offer price to the $80 per share range they've been lobbying for since almost July 2010. However, Brand points out that almost certainly any offer from Sanofi touching $80 per share will be for cash in $72 to $75 range plus a CVR at $5 per share. Here's the rub. The extra $5 per share (if that's the CVR value) will likely not appear for another 2.5 years - between final amount of time to consumate deal and for performance milestones from sales of Lemtrada to kick in (assuming they do).
Brand says that means a Genzyme shareholder who could sell for $71.50 today would be holding out for 5% more ($75) over another 6 months, and might be waiting on the additional $5 (or 6.6%) over another 2 years. Is that 3.3% annual average return worth fighting for, or can one find an alternative investment that would be more attractive?
Posted by Bruce Lehr Jan 24th 2011.