Sanofi-aventis commences tender offer for Genzyme acquisition

Oct 4 2010

Sanofi-aventis [(EURONEXT: SAN) and (NYSE: SNY)] announced today it has commenced a tender offer for all outstanding shares of common stock of Genzyme Corporation (Nasdaq: GENZ) for $69 per share, net to the seller in cash, without interest and less any required withholding taxes.  The transaction is valued at approximately $18.5 billion. The offer, which was unanimously approved by sanofi-aventis' Board of Directors, is scheduled to expire at 11:59 p.m., New York City time on December 10, 2010.

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.  A meeting between the two CEOs on September 20, 2010, proved unproductive, despite several attempts by sanofi-aventis to advance discussions. Sanofi-aventis executives met recently with shareholders who collectively own more than 50 percent of Genzyme's outstanding shares. The conversations revealed that those shareholders were frustrated with Genzyme's persistent refusal to have meaningful discussions regarding sanofi-aventis' proposal.  Sanofi-aventis sent a letter to Genzyme's Board today informing it of the company's intention to commence the tender offer, a copy of which is included with this release.

"Sanofi-aventis is committed to a transaction with Genzyme, and we believe that our offer reflects both Genzyme's upside potential and its current operational challenges," said Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. "Our strong preference has been and continues to be to work together constructively with the Genzyme Board to reach a mutually agreeable transaction, but our attempts to do so have been blocked at every turn.  Our recent meetings with Genzyme shareholders demonstrate that they support a transaction and are frustrated by Genzyme's unwillingness to engage in constructive discussions with us.  This has left us with no choice but to present the offer directly to Genzyme's shareholders.  We strongly believe our offer price of $69 per share in cash represents a compelling value for Genzyme shareholders."

The sanofi-aventis tender offer represents a premium of 38% over Genzyme's unaffected share price of $49.86 on July 1, 2010.  Sanofi-aventis' offer also represents a premium of almost 31% over the one-month historical average share price through July 22, 2010, the day prior to press speculation that sanofi-aventis had made an approach to acquire Genzyme.  

Today, sanofi-aventis will file with the U.S. Securities and Exchange Commission ("SEC") a Tender Offer Statement on Schedule TO, containing the Offer to Purchase, form of Letter of Transmittal and related tender offer documents, setting forth in detail the terms and conditions of the tender offer.  The tender offer is conditioned on, among other things, (i) tender of a majority of the outstanding shares of Genzyme common stock, calculated on a fully-diluted basis, (ii) Genzyme's Board of Directors having approved the tender offer and the subsequent merger described in the tender offer document filed by sanofi-aventis today with the "SEC" such that the restrictions on business combinations with interested shareholders under the General Laws of Massachusetts will be inapplicable to such transactions, (iii) the receipt of required regulatory approvals and (iv) Genzyme not having entered into any transaction or taken other actions that would impair completion of the tender offer or diminish the value of Genzyme to sanofi-aventis. Sanofi-aventis has secured financing for its offer from BNP Paribas, J.P. Morgan Europe Limited and Societe Generale.

Sanofi-aventis' lead financial advisors for this transaction are Evercore Partners and J.P. Morgan and its legal advisor is Weil, Gotshal & Manges LLP.

Below is the full text of the letter sent today:

Dear Henri:

We are disappointed that you remain unwilling to have constructive discussions with us regarding our offer to acquire Genzyme Corporation.  We continue to believe that our proposal is compelling for your shareholders and would provide them with immediate and substantial value that reflects the potential of Genzyme's business and pipeline.  

Subsequent to making our offer public on August 29, 2010, we met with your largest shareholders owning collectively over 50% of Genzyme's outstanding shares.  It was clear from our meetings that your shareholders are supportive of our initiative and, like us, are frustrated with your refusal to have meaningful discussions with us regarding our proposal.  Your continued refusal to engage with us in a constructive manner is denying your shareholders an opportunity to receive a substantial premium, to realize immediate liquidity, and to protect against the risks associated with Genzyme's business and operations.

After several months of our repeated requests for a meeting with you, we finally met on September 20, 2010.  Unfortunately, this meeting was not productive.  In an effort to advance our discussions, I shared a very narrow information request focused on confirming your anticipated manufacturing recovery.  Even though we and the market have analyzed and assessed the prospects for alemtuzumab, I proposed a meeting with your commercial team to understand their perspectives on the role alemtuzumab could play in the evolving multiple sclerosis market.  You were unwilling to pursue either of these or any other path forward.  You were also unwilling to provide us with your perspective on an appropriate valuation for Genzyme.

You have, therefore, left us no alternative but to commence a tender offer and take our offer directly to your shareholders.  We strongly believe that our offer price of $69.00 per share in cash is compelling and represents substantial value for Genzyme's shareholders.

This offer represents a premium of 38% over Genzyme's unaffected share price of $49.86 on July 1, 2010, the day prior to the press speculation regarding sanofi-aventis' potential acquisition plans for a large US biotech company.  It also represents  a premium of almost 31% over the one-month historical average share price through July 22, 2010, the day prior to press speculation that sanofi-aventis had made an approach to acquire Genzyme.    

We believe that a combination of our two businesses would be beneficial to our respective shareholders and employees, and the patients and physicians we serve.  Sanofi-aventis would put its full resources behind Genzyme to invest in developing new treatments, enhance penetration in existing markets and further expand into emerging markets.  Sanofi-aventis is well positioned to help Genzyme address its manufacturing problems.  Genzyme would become the global center for excellence for sanofi-aventis in rare diseases and this unit would be managed as a stand-alone division under the Genzyme brand, with its own R&D, manufacturing and commercial infrastructure.  Genzyme's management and employees would play a key role within sanofi-aventis, and the combination would further increase sanofi-aventis' presence in the greater Boston area.

It remains our strong preference to work together with you to reach a mutually agreeable transaction.  However, given your unwillingness to engage in constructive discussions with us, we had no choice but to commence a tender offer. Given our commitment to this transaction, we will continue to consider all alternatives for consummating an acquisition of Genzyme.  We believe it is in the best interests of both companies, and our respective shareholders and other constituencies, to move forward quickly to complete this transaction.  We and our advisors are available to meet with you to discuss the terms of our offer and to conclude a transaction expeditiously.