Analysis: Investors see Genzyme being sold for $70/share-plus

BOSTON (Reuters) - A relatively new shareholder base, drawn in by activist investor Carl Icahn, may be more likely to accept a lower premium for their shares of Genzyme Corp GENZ.O, should it be acquired, than the company's long-standing investors.

Icahn, who increased his stake in Genzyme last year and later threatened to launch a proxy fight to force changes to the board, attracted a group of investors hoping to profit from his well-known ability to shake up undervalued companies and sell them for a profit.

They might be willing to accept a narrower premium than long-standing investors such as OrbiMed Advisors LLC, a long-time investor that owns nearly 1 percent of Genzyme's shares.

"I suspect a figure in the $70 range will be enough," said OrbiMed managing partner Sam Isaly in an interview. "The new shareholder base I think is probably more likely to jump for a premium that is not as high as the old shareholder base."

Genzyme's shares rose nearly 7 percent to $66.86 in afternoon trading on Nasdaq.

Genzyme's shares have risen 24 percent since reports emerged on Friday that French drugmaker Sanofi-Aventis SA (SASY.PA) had approached Genzyme about a possible acquisition.

Neither Genzyme nor Sanofi has confirmed the approach, which Bloomberg News said on Monday had been rebuffed by Genzyme.

Genzyme is one of only a handful of large biotech companies that have not been snapped up by big drugmakers looking for new products to replace those that are set to lose patent protection.

Shares of Biogen Idec Inc (BIIB.O) rose 5.7 percent to $56.50 on Monday afternoon as investors bet it could be next on the block.

Michael Obuchowski, chief investment officer at Genzyme shareholder First Empire Asset Management, said investors would likely be happy with a price in the $75-$80 range, where the company was trading before it was hit by manufacturing problems in late 2008.

"I think a price in that range would be an attractive one for shareholders because there is still risk associated with the company's recovery from its manufacturing problems," he said. "There are not guarantees everything will go smoothly."

Chances are, if Sanofi has made a bid, others will follow.

"The bankers will be undertaking an auction behind the scenes," said Isaly. "It will be a private auction."

Almost every big drugmaker needs new products, and their only real option is to buy them.

"I really think the field is wide open," said Obuchowski.

Genzyme, which is based in Cambridge, Massachusett, and employs more than 12,000 people worldwide, makes drugs for rare and chronic diseases. Its biggest-selling product is Cerezyme, a treatment for Gaucher disease, a rare genetic disorder.

Another top drug is Fabrazyme, a drug for Fabry disease.

Last year Genzyme was forced to close its manufacturing plant in the Allston neighborhood of Boston, leading to a shortage of both lifesaving drugs.

The crisis prompted an outpouring of criticism from patients and investors. Genzyme avoided a proxy battle with Icahn by agreeing to appoint two of his representatives to its board.

(Reporting by Toni Clarke, editing by Gerald E. McCormick)