- The amount Sanofi is offering is a very good price for Genzyme's shareholders. Sanofi bid $69 but it is clear they would move up to the mid seventies. The only reason Genzyme even traded above $50 was because people were speculating that they might be taken over. Genzyme shareholders holding out for more are being greedy. They want the price for the company assuming the manufacturing problems will be resolved quickly and on multiples paid during times when biotech as a group traded for much higher multiples.In addition, they are assuming that there will not be price pressures on Genzyme's drugs from sovereign countries.
- Genzyme was in the middle of a $1 billion accelerated stock repurchase plan when Sanofi made a bid. Genzyme's stock price was in the forties when they initiated this plan so Sanofi's bid is forcing them to pay a lot more for their stock than they intended, as one must continue buying shares in an accelerated repurchase plan. If they walk away from a deal they will have no deal for shareholders plus they will have paid by my estimation $200 million more for their share repurchase than they intended.
- Genzyme is quite clearly up for sale to the highest bidder. If nobody emerges now and Genzyme rejects Sanofi's bids it will be a long time before Genzyme shareholders see these prices again.
Genzyme Deal Should Happen Eventually
I believe a Genzyme deal will happen for a number of reasons: