Sanofi Makes Informal Approach To Genzyme
French drugmaker Sanofi-Aventis, on the hunt for a large acquisition, is sounding out biotech Genzyme on a possible deal, a source familiar with the matter said on Friday.
Shares in Genzyme, which is just beginning to emerge from a manufacturing crisis that has caused shortages in its supply of drugs for rare disorders, jumped 17.4% to $63.60. The talks were first reported by the Wall Street Journal.
According to the source, the talks are at an early stage and no deal is imminent. Issues such as price and management structure have not been discussed, the source said.
Genzyme's current market capitalization is close to $14 billion, but the company would be expected to argue for a significant premium to that based on its drug pipeline, analysts said.
"If you started to use the $20 billion number that has been discussed in the past, it puts Genzyme closer to $75 (a share)," said RBC Capital Markets analyst Michael Yee.
Sanofi is feeling the sting of patent expirations on a number of its biggest products, hurting its profit outlook.
U.S. sales of its colon cancer drug Eloxatin have tumbled following recent generic launches, and its blockbuster cancer drug Taxotere will lose patent protection by November in Europe and the U.S.
Earlier this month, a source told Reuters that Sanofi was looking at several U.S. deals, including one or two that could be worth at least $15 billion.
Reports of Sanofi's acquisition interest buoyed drugmaker shares at the time, including Genzyme and Botox maker Allergan.
