Sanofi-Aventis breaks silence on Genzyme acquisition, offering $18.5 billion for the troubled US biotech firm

Following nearly two months of rumor and speculation French drug major Sanofi-Aventis (Euronext: SAN and NYSE: SNY; The Pharma Letters passim) on Sunday revealed that it has submitted a non-binding proposal to acquire the troubled USA-based rare diseases drug specialist Genzyme (Nasdaq: GENZ) in an all-cash transaction valued at around $18.5 billion, thus paving the way for a hostile bid for the biotechnology company.

Under the terms of the proposed acquisition, Genzyme shareholders would receive $69 per share in cash, representing a 38% premium over Genzyme's unaffected share price of $49.86 on July 1, 2010. The offer also represents a premium of almost 31% over the one-month historical average share price through July 22, 2010, the day prior to press speculation that Sanofi-Aventis had made an approach to acquire Genzyme. Based on analyst consensus estimates, the offer represents a multiple of 36 times Genzyme's 2010 earnings per share and 20 times 2011 EPS, the French firm stated.

In a letter to Genzyme's chairman and chief executive Henri Termeer, Sanofi-Aventis' CEO Christopher Viehbacher confirmed previous attempts to discuss the takeover and an informal offer of July 29 repeated on August 11, pointing out that the US firm had underperformed its peers for a number of years, noting that 'it continues to face several significant and well-documented challenges that were discussed thoroughly during this year's proxy campaign, and which Genzyme recently disclosed will take three to four years to resolve.'