Genzyme Board Unanimously Rejects Sanofi-Aventis Tender Offer
October 07 2010 - 4:43PM
Business Wire
Genzyme Corp. (NASDAQ: GENZ) announced today that its board of
directors has voted unanimously to reject the unsolicited $69.00
per share tender offer from Sanofi-Aventis, and the board
recommends that Genzyme shareholders not tender their shares to
Sanofi-Aventis pursuant to the offer. 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.
The full basis for the board’s recommendation is set forth in a
Solicitation/Recommendation Statement on Schedule 14D-9, which was
filed by Genzyme today with the Securities and Exchange
Commission.
Genzyme’s board and management are initiating a program to
communicate with shareholders regarding the intrinsic value of the
company. In the near future, Genzyme will hold an Analyst and
Investor meeting in New York to provide a financial outlook and
other pertinent information. The event will be web cast on the
investor events section of www.genzyme.com. Details of the meeting
will be announced separately. On October 21, following the release
of its third-quarter earnings results, the company will begin a
series of meetings with shareholders.
Genzyme’s financial advisors are Credit Suisse and Goldman,
Sachs & Co., and its legal advisor is Ropes & Gray LLP. The
legal advisor for Genzyme’s independent directors is Wachtell,
Lipton, Rosen & Katz.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is
dedicated to making a major positive impact on the lives of people
with serious diseases. Since 1981, the company has grown from a
small start-up to a diversified enterprise with more than 12,000
employees in locations spanning the globe and 2009 revenues of $4.5
billion. In 2010, Genzyme was named to the Fortune 500.
With many established products and services helping patients in
100 countries, Genzyme is a leader in the effort to develop and
apply the most advanced technologies in the life sciences. The
company's products and services are focused on rare inherited
disorders, kidney disease, orthopaedics, cancer, transplant, and
immune disease. Genzyme's commitment to innovation continues today
with a substantial development program focused on these fields, as
well as cardiovascular disease, neurodegenerative diseases, and
other areas of unmet medical need.
This press release contains forward-looking statements,
including without limitation, statements regarding: Genzyme’s
potential to generate substantially more value for shareholders
than the offer price by executing its five-point plan and further
deploying its prospective free cash flow; the prospects of its
late-stage pipeline, including expected launch dates and market
potential. These forward-looking statements are subject to a number
of risks and uncertainties that could cause actual results to
differ materially and adversely from those set forth in or implied
by forward-looking statements. These risks and uncertainties
include, but are not limited to: that Genzyme is unable to
recognize value from any or all of it’s five-point plan due to
manufacturing problems, clinical trial set-backs, or any other
reason; that one or more of Genzyme’s late-stage pipeline products
is unsuccessful; that the offer makes it more difficult for Genzyme
to maintain relationships with employees, customers, suppliers and
other business partners; that shareholder litigation brought in
connection with the offer will result in significant defense,
indemnification and liability costs; risks associated with
development, manufacturing and commercialization of Genzyme’s
products and product candidates; and other risks and uncertainties
discussed in the Company’s filings with the SEC, including the
information referred to under the heading “Risk Factors” section of
the Company’s quarterly report on Form 10-Q for the quarter
ended June 30, 2010. The Company does not undertake any obligation
to update any forward-looking statements, which speak only as of
the date of this press release.
Important Information
Genzyme has filed with the Securities and Exchange Commission a
Solicitation/Recommendation Statement on Schedule 14D-9. Genzyme
shareholders are advised to read the company's
Solicitation/Recommendation Statement on Schedule 14D-9 because it
contains important information. Shareholders may obtain a free copy
of the Solicitation/Recommendation Statement on Schedule 14D-9, as
well as any other documents filed by Genzyme in connection with the
tender offer by Sanofi-Aventis, free of charge at the SEC's
website at http://www.sec.gov. In addition, investors and security
holders can obtain free copies of these documents from Genzyme by
directing a request to Genzyme at 500 Kendall Street, Cambridge, MA
02142, Attention: Shareholder Relations Department, or by calling
617-252-7500 and asking for the Shareholder Relations
Department.
Genzyme’s press releases and other company information are
available at www.genzyme.com and by calling Genzyme’s investor
information line at 1-800-905-4369 within the United States or
1-678-999-4572 outside the United States.
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