Sanofi-Aventis denied that it had dangled a higher price for Genzyme before going hostile with its $18.5 billion bid, deepening the animosity in their transatlantic takeover fight.

Genzyme said on Thursday that Sanofi Chief Executive Chris Viehbacher had proposed a deal price range of $69 per share to $80 per share at a meeting with Genzyme CEO Henri Termeer in late September, two weeks before it went hostile with a $69-per-share bid.

"We strongly disagree with Genzyme's characterization of the Sept. 20 meeting," Sanofi chief spokesman Jean-Marc Podvin said on Friday in response. "We offered no price range and Genzyme continued to refuse to engage with us on discussions on valuations."

Genzyme, however, said it accurately reported the facts in its regulatory filing. "We are unequivocally standing by our characterization of the meeting on Sept 20," Genzyme spokesman John Lacey said through an email.

France's Sanofi aims to acquire U.S.-based Genzyme's lucrative portfolio of drugs for rare diseases as it prepares for the loss of patent protection on top-selling drugs, such as its biggest product, the blood clot preventer Plavix.

Underscoring that harsh reality, Sanofi said on Friday it would cut 25 % of its U.S. pharmaceutical jobs. Most of the 1,700 positions from the unit would be cut from its U.S. sales force, Sanofi said.

Since news of Sanofi's interest in Genzyme emerged, the rhetoric between Termeer and Viehbacher has ratcheted up. The exchanges could affect how quickly any deal would be resolved, with a hostile campaign likely to last well into next year.

A source familiar with the discussions said Sanofi could sit back and wait while its offer ticks toward a Dec. 10 expiry date, hoping Genzyme or its shareholders lose their nerve and blink first.

The source added that a deal might not be struck until Termeer resigned or was removed by his board.

"This could end up in a proxy fight again for Genzyme," the source said, referring to the company's battle with activist investor Carl Icahn earlier this year. Genzyme settled with Icahn and named two of his representatives to its board.

Deeply Invested
Termeer, a founder of Genzyme and deeply invested in the company and its legacy, appears ready for a long fight.

Viehbacher, who cut his teeth on a number of smaller deals both at Sanofi and as head of North American operations at GlaxoSmithKline, seems prepared to shape his tenure around an ability to get the deal done on his terms.

The latest twist centers on their meeting on Sept. 20.

According to a Genzyme securities filing, Viehbacher proposed that the two discuss a deal price range of $69 to $80 per share. Viehbacher, according to Genzyme, said the price range was "manageable" but doubted he could reach the higher end based on his current understanding of the U.S. company's business.
Genzyme, which made the disclosure as it repeated its rejection of Sanofi's offer, said Termeer would not discuss that range or suggest an alternate price. Sanofi's Podvin dismissed the account of the conversation.

"At that meeting we made a variety of efforts to move the process forwards, including discussing the merits of our $69 per share offer, and we tried to understand if media reports about Genzyme's price expectations were accurate," he said.

Many analysts believe an all-cash deal - funded by plentiful cheap loans - would enhance Sanofi earnings comfortably even at the mid-$70s per share level. A Reuters poll in August found the average price forecast by analysts was $77.90 per share.

"I think the offer will be raised, but I am not sure that it will go as high as $80," said analyst Jean-Jacques Le Fur at Oddo Securities in Paris.
"According to my calculations, to create value the offer should not go above $75. Sanofi is in a position of strength because it is probably the lone suitor, and the board and management of Sanofi don't seem to want to go too high."

For Genzyme, however, such a deal would have it selling out below a peak above $83 reached in 2008, before the company ran into serious manufacturing problems that hit the stock.

Viehbacher has said that Genzyme might be worth more than $69 a share, but that he would need more information on its recovery from the manufacturing crisis and the sales potential of a promising experimental multiple sclerosis drug, Campath.

Analysts' estimates for its ultimate potential have ranged from $500 million to $1.8 billion a year.

If Genzyme's share price started to fall to $69 or below, Sanofi's offer could begin to look good and shareholders might force management to the table.

Genzyme said on Thursday it would evaluate alternatives for its assets, including reaching out to other companies to prove it is worth more to investors. But no prospective white knights have emerged thus far.