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Sanofi offer rejected by Genzyme

31st August 2010

A US$18.5 billion buyout offer by Paris-based pharmaceutical giant Sanofi-Aventis to acquire biotechnology company Genzyme has been rejected as an undervaluation of the company.

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The drug developer offered Genzyme shareholders US$69 per share after the company began struggling with manufacturing snarl-ups.

The market appeared to expect the offer to be bid higher, with Genzyme shares trading above the price Sanofi was offering on Monday.

Genzyme Chairman and CEO Henri Termeer wrote to Sanofi-Aventis, saying that its offer had been unanimously rejected by the board.

The starting price was unrealistic, and Genzyme would not be prepared to start talks on such a basis, the letter said.

Sanofi-Aventis CEO Chris Viehbacher said he still believed the offer represented a fair price for Genzyme, but that he was not surprised by Genzyme's letter, which he said was evidence of continued "stonewalling".

Genzyme is currently in the late development stages of promising drugs for high cholesterol and other disorders, and already sells some lucrative drugs for rare genetic disorders.

Sanofi, whose business has been hit by greater competition from generic manufacturers for the most popular drugs, has developed a shopping list of smaller companies and rights to drugs in development.

Brian Abrahams, an analyst with Oppenheimer, said he still expected a negotiated deal between the two companies, with a selling price of between US$72 and US$74/share.


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