Hottest Biotech Climbs 4% on Unsolicited Acquisition Offer from Sanofi-Aventis

Posted by on Aug 30, 2010 | No comment

Genzyme Corporation (NASDAQ: GENZ) today confirmed the receipt of an unsolicited, non-binding acquisition offer from Sanofi-Aventis. Sanofi-Aventis offered to acquire all outstanding shares of Genzyme Corporation for $69 per share in cash.

In response to the unsolicited offer, the Genzyme’s board of directors met on Sunday and asked the company to send a response letter to Sanofi-Aventis. In the response letter, the board asked the company to mention that the latest offer is similar to last month’s offer, providing no new information and improvement in price. The board also asked the company to mention in the letter that its bankers met with Sanofi’s financial advisors on August 24, 2010, and gave them useful, non-public information regarding the progress made by the company to improve its manufacturing capacity.

Now that the Genzyme board has rejected the offer from Sanofi-Aventis again, it will be interesting to see if Sanofi decides to raise the acquisition offer. Genzyme’s board includes the company’s major shareholders and therefore any offer from Sanofi will have to first impress them. So far from the board’s reaction to the two offers, it seems that it is confident about the progress made by the company to improve its manufacturing capacity. The board obviously feels that Sanofi’s offer is not taking into account the progress made by the company in improving its manufacturing capacity.

The development makes the Genzyme stock an interesting play. There is a chance that Sanofi may indeed raise its offer. Also, there is a possibility that the Genzyme board may seek a counter-bid. The Genzyme stock has a 52-week range of $45.39-$70.97. The stock is currently trading above its 50-day and 200-day moving averages. The stock has a support level at $66.60 and a resistance level at $68.30. Year-to-date, the Genzyme Corporation stock gained 37.97%, outperforming the broader market.

Genzyme Corporation reported its second-quarter financial results on July 21, 2010. The company posted second-quarter revenue of $1.08 billion, compared with $1.23 billion reported for the same period last year. The company’s GAAP net income for the second quarter of 2010 was $23,000, compared with GAAP net income of $187.6 million reported for the second quarter of 2009. For the full year of 2010, the company is expecting total revenue to come in between $4.4 billion and $4.5 billion and non-GAAP EPS to come in between $1.90 and $2.

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