BOSTON (Reuters) - Genzyme Corp GENZ.O Chief Executive Henri Termeer said he is willing to sell the company he built up over 25 years, but not for $69 a share.
In an interview with Reuters, Termeer said it was unlikely that French drugmaker Sanofi-Aventis SA (SASY.PA) would go hostile with its $18.5 billion bid and that the two sides had a good chance of coming to terms, though negotiations could last months.
On Monday, the Cambridge, Massachusetts-based biotech company rejected Sanofi’s bid of $69 a share. Sanofi has hinted it may take its offer directly to Genzyme shareholders if the company refuses to enter discussions based on its current offer.
”I think a hostile situation is unlikely to occur here,“ Termeer said. ”We need each other too much in terms of future value.
“It may well be that they go that way, but I would recommend against it if I were advising the other side because it is not the way to get this done.”
He said there was a “high probability” that a deal would eventually be consummated, given the two companies’ strategic needs. “You have to have a reasonable starting point for negotiations,” he added.
“The company is not for sale at $69 a share,” he said. “A deal will only get done when the strategic value of the company is properly recognized.”
Sanofi faces the loss of some 20 percent of its revenue by 2013 as generic competition erodes sales. Genzyme is the world’s leading maker of drugs for rare genetic diseases, generating sales in 2009 of $4.5 billion.
Genzyme, in turn, is working its way through a manufacturing crisis that has lead to shortages of two of its biggest-selling products.
Termeer declined to say what he would consider a reasonable starting point, or one that would warrant the company opening up its books to Sanofi. Sources previously told Reuters that Genzyme was seeking an offer of at least $75 a share before serious negotiations could begin.
Sanofi’s chief executive, Chris Viehbacher, has said Genzyme shareholders face the choice of continuing to bet on management, taking Sanofi’s offer, or betting that another bidder will enter the fray.
Genzyme shares closed at $70.11 on Tuesday. Investors and industry analysts polled by Reuters have said a deal could be clinched at close to $78 per share.
Termeer said it was too early to tell whether another company would bid, and said neither Genzyme nor its bankers had been reaching out to solicit offers from other companies.
“The bankers don’t have that as part of their scope since it is very early days,” he said. “Once the process with Sanofi starts, that may well change.”
Termeer said he has been having intensive discussions with his shareholders and plans to embark on a “non-deal” roadshow in late September to ensure investors understand the value of the company.
“The shareholders I have been speaking to feel very strongly about the strategic value of the company,” he said.
“They are very reassured to see that the board is unanimous in rejecting this bid and they are very in tune with the value of the recovery we have in process.”
Genzyme was forced to temporarily close its manufacturing plant in Boston last year due to a viral contamination. It has said it is on track to fully restore supplies of Cerezyme, its drug to treat Gaucher disease, and Fabrazyme, its Fabry disease therapy, by the end of the year.
Sanofi argues that there is still risk associated with Genzyme’s ability to emerge from the crisis, which sent the company’s shares plummeting from a peak of almost $84 before the manufacturing crisis in 2008 to a low of $45.39 in May, their lowest since July, 2004.
The crisis forced Genzyme to appoint three activist investors to its board: two are allies of Carl Icahn, the other is Ralph Whitworth of Relational Investors. They, along with the rest of the board, are resolutely opposed to Sanofi’s offer, Termeer said.
“I think it should be reassuring to shareholders who are not on the board that these activists back the board in a very unanimous way,” he said.
Termeer said Sanofi’s initial, informal approach came in the form of a telephone call from Viehbacher to Termeer.
“It was a pleasant call,” Termeer said. “We know each other and it was not unpleasant. It is not unpleasant now.”
Sanofi said on Tuesday it continues to stand ready to engage in constructive talks with Genzyme “at any time.”
Reporting by Toni Clarke; Additional reporting by Jean-Michel Belot; Editing by John Wallace.