Genzyme's (GENZ) Board Unanimously Rejects Sanofi (SNY) Bid; Calls Offer 'Inadequate'

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Genzyme's (Nasdaq: GENZ) Board unanimously rejects Sanofi-Aventis' (NYSE: SNY) tender offer at $69/share, saying that the bid is "inadequate" and "not in the best interests of the company."

The board considered the following factors, among others, when making its recommendation:

• The offer is based on identical financial terms to two previous unsolicited proposals submitted by Sanofi-Aventis, both of which were rejected by the board. The board remains unanimously resolute in its belief that the offer price of $69.00 per share is inadequate and opportunistic, substantially undervalues the company, fails to recognize the company’s plan to increase shareholder value, and is not in the best interests of Genzyme or its shareholders.
  
• The offer fails to compensate shareholders for the value of Genzyme’s existing business, which delivered compound annual revenue growth of 23 percent from 2002-2009. This business includes a unique and longstanding leadership position in the orphan-drug market; 12 market-leading products with durable revenue streams; and a long history of research and development productivity and success.
  
• The offer fails to recognize the value-creation impact of the company’s five-point plan. Under this plan, Genzyme is focusing on its core business and working to establish operational excellence in manufacturing; capitalizing on near-term growth drivers; divesting non-core businesses; reducing operating costs and improving margins; and optimizing its capital structure. Genzyme has made significant progress in implementing this plan, and the board believes that—given the opportunity to fully execute the plan—the company has the potential to generate substantially more value for shareholders than the offer price. The company also has an opportunity to further deploy its substantial prospective free cash flow to maximize value for shareholders.
  
• The offer fails to reflect Genzyme’s valuable late-stage pipeline, which includes three breakthrough products that are expected to be launched by the end of 2013. Foremost among these products is alemtuzumab, a potentially transformative therapy for multiple sclerosis. Phase 3 clinical trial results for this drug will be available in the middle of next year. Based on the robust clinical results reported to date from the phase 2 study, and the possibility for once yearly dosing, alemtuzumab has the potential to capture a material share of a global MS market that is projected to reach $14 billion when the product is first launched in 2012, offering an exciting revenue opportunity that will result in significant value for shareholders.
  
• The offer price does not adequately compensate Genzyme’s shareholders for the strategic importance and financial benefit to Sanofi-Aventis of a potential transaction with Genzyme.

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