Less than 24 hours after offering to purchase Genzyme for $18.5 billion, Sanofi-Aventis was sent a letter of rejection from the biotech firm’s board of directors stating that the offer just wasn’t worth it.
“Without exception, each member of the Genzyme board believes this is not the right time to sell the company, because your opportunistic takeover proposal does not begin to recognize the significant progress under way to rectify our manufacturing challenges or the potential for our new product pipeline,” Genzyme CEO Henri Termeer wrote.
The letter goes on to state that the company outlined a laundry list of improvements it plans to make in its manufacturing facilities—an area that Genzyme has been chastised for recently—as well as future earnings from its much lauded multiple sclerosis treatment alemtuzumab, currently in development.
The board feels that Sanofi is low-balling the company with its $69-per-share offer, and should be willing to boost the price since Sanofi has openly talked about how much they are willing to pay for mergers and acquisitions as recently as last year.
According to analysts interviewed by Bloomberg, Sanofi should expect to pay upwards of $77 per share for Genzyme, but might not bump up the offer until its had time to thoroughly examine Genzyme’s financials.
Sanofi CEO Chris Viehbacher originally offered the same price for Genzyme in early July when the genetic firm’s stock hovered around $50.
“Notwithstanding this information and assistance, you have not increased your price above $69 per share,” Termeer stated. “You and your advisors claim you are willing to pay more but that you are unwilling to ‘bid against yourself.’ The Genzyme board is not prepared to engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues our company.”