Sanofi Extends $18.5 Billion Genzyme Offer to January 21


Sanofi-Aventis has extended its snubbed $18.5 billion cash bid for U.S. biotech group Genzyme (GENZ.O) by six weeks, buying the French drugmaker time to persuade its reluctant target to talk.

Only 0.9% of shares were tendered by a Friday deadline for the $69-a-share bid, which Genzyme has rejected as too low, and Sanofi has said it won't raise unless Genzyme's board is willing to talk.

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"This gives time to pursue discussions behind the scenes," Raymond James analyst Eric Le Berrigaud said. "They will try to determine at what price Genzyme will decide to partially open the door."

A spokesman for Sanofi confirmed that the company still wanted to enter talks with Genzyme.

Sanofi could look at including a scheme linking Genzyme's value to future performance of its key experimental multiple sclerosis drug, Campath, people familiar with the situation said last week.

The idea of contingent value rights (CVRs) is favored by the Genzyme camp. Through CVRs, Sanofi could end up paying Genzyme investors more if Campath proves to be the success Genzyme expects.

"I find it surprising that they haven't raised their offer. If they are extending their offer, it's probably to negotiate a CVR," CM-CIC analyst Arsene Guekam said. "I don't expect them to raise the offer very significantly, maybe one or two euros."

Analysts widely expect Sanofi can only win Genzyme if it improves its current offer. A Reuters poll in August suggested $78 a share could succeed.

Genzyme shares have been trading at more than $70 on average since July when news broke of Sanofi's interest.The stock was little changed at 52.69 euros ($69.51) in Frankfurt trading by 1204 GMT on Monday. Sanofi shares were 0.3% softer.

Sanofi's efforts to buy Genzyme could continue until May, when Genzyme holds its annual shareholder meeting, giving Sanofi a chance to try to overturn Genzyme's board.

The company said on Monday its offer would now run until January 21, "unless it is further extended."

Long takeover battles are not uncommon. U.S. industrial gases company Air Products (NYSE:APD) has been trying to buy Airgas (NYSE:ARG) since February, while in the drug sector, it took about eight months before Roche could buy the part of Genentech it did not already own.

Genzyme Chief Executive Henri Termeer raised the possibility of negotiating a CVR last month as a way to break the stalemate between him and Sanofi CEO Chris Viehbacher.

Sanofi's finance head, Jerome Contamine, called it "an interesting idea in principle" to resolve value disputes.

Sanofi made its interest in Genzyme known in August and put its offer directly to Genzyme shareholders in October as Genzyme's board said the price was too low to even open talks.

Termeer has said he is prepared to sell the Cambridge, Massachusetts-based biotech he built up over 25 years, but not at $69 a share. Genzyme, the world's leading maker of drugs for rare genetic diseases, made sales in 2009 of $4.5 billion.

Genzyme became a takeover target when viral contamination at its plant in Boston led to a manufacturing crisis that caused severe shortages of two of its biggest selling drugs.

Genzyme shares fell from a peak of almost $84 before the manufacturing crisis in 2008 to $45.39 in May, their lowest level since July, 2004. Since Sanofi's interest emerged, the stock has been trading above $69 and as high as $73.23.

Buying Genzyme would give Sanofi a new and high-margin growth area as mounting generic competition will take out roughly a third of its 2008 sales base by 2013.

Sanofi head Chris Viehbacher has said he would only be open to raising the offer if Genzyme's board would discuss the company's valuation.

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