Sanofi is feeling a little green around the gills. As the hopes of preventing cheaper generic versions of its Lovenox blood thinning drug appear to fade, it needs something else in the medicine cabinet – and it needs it fast.
The problem it faces is that shrewd Genzyme investors know this. Sanofi claims it has shareholders onside with its $69 a share offer – already a 38 per cent premium to its pre-bid price – but with Genzyme management confident the firm is worth at least $75 a share it will face a struggle to convert the apparent goodwill into a decision to sell up.
Any offer in the mid-70s per share could lead to double digit earnings accretion for Sanofi and there has been speculation it has held talks with its bank about raising extra capital for a higher bid. Conversely, any more than $75 a share would stretch the French firm too far.
The acquisition could give Sanofi the lease of life it requires, allowing it to break into new high-margin rare disease drugs. However, it is not without risk – Genzyme has been struck with troubles of its own, including contamination issues at its main plant, and there is no guarantee the purchase will bear fruit immediately.
With Sanofi’s offer not due to expire until 10 December, both sides will now dig themselves in for a war of attrition. The question is who will blink first.