Citigroup, Inc (NYSE: C) analysts said in a research note that Sanofi-Aventis SA may begin a hostile bid for Genzyme Corp (NASDAQ: GENZ) if the U.S.-based biotechnology company resists a push for a take-over.
Citigroup analysts Mark Dainty and Yaron Werber wrote in a research note to clients on Monday that no other bidder will likely emerge for Genzyme and Sanofi will likely succeed in acquiring the company for $74.00 to $77.00 per share. Genzyme is currently worth about $70.00 per share based on the firm’s current cash flow and Sanofi would likely benefit from as much as $5.50 a share of synergies in an acquisition, they said.
Genzyme Investors say that Sanofi may have to pay at least $80.00 per share, or $21.30 billion, to acquire the drug manufacturer which produces products that fight genetic diseases. Currently Sanofi CEO Chris Viehbacher has support from his board of directors to offer as much as $70 a share, or about $18.7 billion, and is preparing a formal offer letter, according to a report from Bloomberg.
Shares of Genzyme rose $0.44 or about 0.63% to $70.00 at 10:39 a.m. ET on Monday. Weber, based out of New York, cut his rating on Genzyme from “buy” to “hold” and boosted his price forecast for the stock from $64.00 to $76.00. Dainty, based out of London, reiterated his “buy” rating on the stock.
“While we think a deal is likely, we see likely deal price at mid/high $70s, and so we are advocating taking some profits off the table in case a deal falls through,” the analysts wrote.
Sanofi may make a formal offer to Genzyme within weeks at $68 to $70 a share, and Genzyme may ask in return for $80 or more, according to Dainty and Werber. Should an agreement not be reached, investors would welcome a hostile bid even at less than $80 a share, they wrote.
“The company is more susceptible to a hostile bid and the board more exposed to shareholder pressure than is typical for U.S. companies,” the analysts wrote.
