August 30, 2010 6:00 AM
Sanofi's $18.5B Bid for Genzyme Revealed; Dell, HP Battle for 3PAR Continues
Posted by Ed Shanahan
Update1, 8/30/10 at 8:15 a.m. - Genzyme has rejected Sanofi's bid, according to The New York Times, citing a letter from Genzyme CEO Henri Termeer to Sanofi's chief executive, Chris Viehbacher. The letter states that the offer, "provides no new information and no improvement in price, and therefore fails to establish a basis for engagement by the Genzyme board." It reiterates Genzyme's position, as outlined in an August 11 letter, which stated, "each member of the Genzyme board believes this is not the right time to sell the company, because your opportunistic takeover proposal does not begin to recognize the significant progress underway to rectify our manufacturing challenges or the potential for our new-product pipeline."
French drug maker Sanofi-Aventis went public with its offer for biopharmaceutical company Genzyme on Sunday, putting forth an $18.5 billion bid to acquire the Cambridge, Massachusetts-based company. The move was reported by several news outlets, including The New York Times, Bloomberg, and the Associated Press.
Sanofi had approached Genzyme earlier this summer, as has been reported, and the two companies held talks about a possible merger. By late July, Sanofi made an offer--press reports at the time suggested it could go as high as $21 billion. On Sunday, the value of the deal, $18.5 billion, was revealed in a letter from Sanofi chief executive Chris Viehbacher to Genzyme chief executive Henri A. Termeer. The letter also revealed that the talks did not go so smoothly, according to the Times.
"We are disappointed that you rejected our proposal on Aug. 11 without discussing its substance with us," Viehbacher wrote. "Our financial advisers finally met briefly on Aug. 24, but the meeting simply served as further confirmation that as throughout you remain unwilling to have constructive discussions."
Sanofi's offer of $69 a share is 38 percent more than Genzyme’s share price before news of a possible deal emerged in late July. According to Bloomberg, Sunday's move opens the way for the bid to turn hostile, should Genzyme not react favorably to an offer originally extended on July 29.
As we reported on August 3, Weil, Gotshal & Manges is advising Sanofi-Aventis on the deal. The Weil team is led by New York-based corporate partner Michael Aiello, according to a statement from the firm. Weil has represented the drugmaker in the past, including late last year on Sanofi's $1.9 billion acquisition of the consumer products company Chattem.
We also reported that Wachtell, Lipton, Rosen & Katz has landed a role representing Sanofi, according to two sources familiar with the matter. The firm was around for the creation of Sanofi-Aventis in 2004, when the firm advised the company then known as Sanofi Synthélabo on its $68 billion acquisition of Aventis.
We'll have more on the deal and the firms working on it for each side later today. (Genzyme was said to have reached out to Ropes & Gray to handle the deal; Ropes has represented Genzyme before, including last year on Genzyme's acquisition of the rights to three cancer drugs from Bayer, according to our prior reporting.)
The Battle for 3PAR
The weekend saw more activity in the heated pursuit of 3PAR by Dell and Hewlett Packard. Reports late Sunday indicated 3PAR's board was leaning towards accepting HP's offer for $30 per share, calling it "superior" to what Dell had put on the table on Friday. (Here's 3PAR's statement reacting to the higher bid.)
This is the sixth public bid for 3PAR in under two weeks. We were amused by a report from CNNMoney on Sunday that asked whether Dell and HP are crazy. Consider that HP's $30 per share offer represents a 211 percent premium over the value of 3PAR's stock before the bidding war between Dell and HP started. Also, 3PAR, CNNMoney reports, has "never turned an annual profit in its three years as a public company, so it would need to add over $40 million in free cash flow to make the deal profitable...That's unlikely to happen for at least three years." Nuts?
The ball is now back in Dell's court. We'll be following the matter as it plays out on Monday.
Debevoise & Plimpton is advising Round Rock, Texas-based Dell on the acquisition, with partners Jeffrey Rosen and Kevin Rinker leading the way. The Debevoise team includes partners Jeffrey Cunard, Peter Furci, Jonathan Lewis, Daniel Abuhoff, and counsel Stuart Hammer, Kyra Bromley, and Carl Micarelli.
Wilson Sonsini Goodrich & Rosati represent 3PAR with a team headed by partner Michael Ringler. Partners Robert Latta, Robert Kornegay, and Ralph Barry are working on the deal with Ringler. The firm has represented 3PAR since its incorporation as a startup in 1999, and handled all its corporate legal work since then.
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