* Investors reluctant to back offer much over $70 a share
* CEO urged to be "disciplined" following initial $69 offer
* Sanofi's shares flat, Genzyme's up 1.4 pct in Germany
By Cecilia Valente
LONDON, Aug 3 Sanofi-Aventis (SASY.PA) chief
executive Chris Viehbacher should aim to land U.S. biotech group
Genzyme GENZ.O for around $19 billion to keep his investors on
side, according to institutional shareholders in the French
Two shareholders told Reuters on Tuesday they would not be
happy with Sanofi paying much over $70 a share, or around $18.7
billion, while a third said he was concerned about valuations
being put on Genzyme.
Viehbacher, who took over 20 months ago, is shaking up the
Paris-based firm by cutting costs and diversifying operations.
Buying Genzyme would be the biggest move yet in the hunt for new
sales to offset revenues lost as a result of patent expirations.
Sanofi has made a takeover proposal valued at $69 per share
to Genzyme and the two sides are discussing the offer, sources
familiar with the situation said on Monday. [ID:nN02102543]
Genzyme's share price, however, is already above this level
-- it ended at $70.36 on Nasdaq on Monday and the stock added
1.4 percent in morning trade in Germany GENZ.F.
A spokesman for Sanofi, whose shares were up just 0.2
percent at 45.49 euros by 1013 GMT, declined to make any comment
on developments on Tuesday.
BENEFIT OF THE DOUBT
One top-15 shareholder in Sanofi acknowledged Viehbacher
would probably have to raise his opening offer, but only "a
"I would give him the benefit of the doubt that he will be
reasonable, disciplined with the price," the shareholder said.
"Common sense dictates that Genzyme would fit Sanofi. It
would make sense for Sanofi to buy them but whether they can
agree on a price is a totally different story."
One source familiar with the situation said on Monday that
Genzyme was unlikely to accept a deal at under $80 a share.
But a second top-30 Sanofi shareholder said Viehbacher would
struggle to sell the deal to investors if the price went much
"If I look at Genzyme, they could make this value-neutral
and look attractive at this level, around $70 a share. If you go
much higher, that would make it a very tough call. We would need
to see a lot of cost cutting and incremental synergies to work,"
"Any price much higher than this? I do not think the
shareholders would like that."
For BreakingViews comment on deal click on: [ID:nLDE6720HF]
For key news and context on Genzyme/Sanofi: [ID:nN28227807]
For graphic on sector valuations vs Sanofi and Genzyme:
For graphic showing pharma aquisitions of biotech firms:
Many analysts think a deal will end up being done in the
mid-$70s per share, assuming no counter-bidder emerges.
Citigroup analysts said in a research report that Sanofi was
likely to be the only buyer and end up paying $74 to $77.
GlaxoSmithKline (GSK.L), Johnson & Johnson (JNJ.N) and
Pfizer (PFE.N) have all been mentioned as potential interlopers
but industry experts think a "white knight" may be elusive.
Key activist shareholders Relational Investors and Carl
Icahn hold 3.8 percent and 4.9 percent of Genzyme, respectively.
(Additional reporting by Caroline Jacobs in Paris; Writing by
Ben Hirschler; Editing by Greg Mahlich)