French drugmaker Sanofi-Aventis launched a hostile bid for Genzyme at $69 per share, or $18.5 billion, setting off what could be a protracted battle for control of the U.S. biotech company.

The move comes a month after Genzyme rebuffed an approach from Sanofi-Aventis at the same price. Sanofi has been in discussions with Genzyme shareholders and stated repeatedly that it would go no higher.

"While Sanofi-Aventis' strong preference is to engage in constructive discussions with Genzyme, Genzyme's board and management team's continued refusal to do so has led Sanofi-Aventis to commence the tender offer," said Sanofi.

Sanofi Chief Executive Chris Viehbacher said he had met with the CEO of Genzyme, Henri Termeer, on Sept. 20, but the talks "proved unproductive."

Sanofi added that it had met with Genzyme shareholders who collectively own more than 50% of the biotech, and that these people were frustrated with Genzyme's reticence to engage in real talks with Sanofi.

Logical Move
Mike Ward, an industry analyst at Ambrian Partners in London, said taking the offer direct to shareholders was a logical move.
"It doesn't mean it's in the bag, but if Viehbacher feels he's got decent support among shareholders he might as well start at $69," he said. "He might need to squeeze it up slightly to get some of the more hard-core on board later on in the process, but it makes sense to go with the offer that's out there."

Viehbacher added he might sweeten the offer if Genzyme management provided more information. "I think if someone helped us to understand where there is more value we would be prepared to consider it," he told reporters in a conference call.

In a letter dated Oct. 4 that Viehbacher wrote to Termeer, he criticized Termeer's unwillingness to provide information about Genzyme's ongoing manafacturing issues and a promising new indication for a drug. Both questions are central to the valuation of the biotech firm's fortunes.

There had been media speculation last week that Sanofi might increase its offer by $1 or $2 a share to try and get Genzyme management to the table, but Ward said raising the offer without good cause would mean Viehbacher was bidding against himself.
So far, there is no sign of any alternative bidder emerging for Genzyme, a maker of high-priced drugs to treat rare diseases, which has run into trouble recently due to manufacturing problems.