Genzyme Needs to Update Its Merger Status (GENZ, SNY, PFE, AMGN, JNJ)

Health and Healthcare

Published: August 9, 2010 8:01 am

Last Updated: April 27, 2020 10:03 pm

Genzyme Corporation (NASDAQ: GENZ) still has an incredible merger ‘deal premium’ associated with it over a pending Sanofi-Aventis (NYSE: SNY) buyout. Genzyme’s troubles have left it vulnerable to a deal for a while now, and its share price having been in the high-$40’s and low-$50’s before word of the deal leave Genzyme extremely vulnerable if this $69 to $71 discussed price range is not hit.

The status of the reports have Sanofi having sent a letter with a $69 offer, but no formal letter hs been published. Genzyme shares went from roughly $54.00 up to just over $70.00.

Morningstar noted some of the same potential buyers we had which could be suitors. Pfizer Inc. (NYSE: PFE) was a noted potential and GlaxoSmithKline plc (NYSE: GSK) was noted. Lastly, Amgen Inc. (NASDAQ: AMGN) was a noted company that could be interested with its cash arsenal that it has been building. Our take is that Amgen could diversify this way, but Pfizer is still integrating Wyeth and this size would contradict what management said in deal sizes just last week. We also had penciled in Johnson & Johnson (NYSE: JNJ) as a potential acquirer.

The Genzyme price action has only been elevated for two weeks now. The problem is that Genzyme is tarnished and trust is very short at this moment in time.

We originally gave an implied buyout price of $70.00-ish in options trading terms, but the new figure that is being thrown around as far as what it will take for Genzyme to sell is $74.00 to $77.00. And some believe that Henri Termeer wants $80.00.

Two weeks may not seem like that long. With this still having an elevated premium, with Genzyme having issues on a standalone basis, and with the clock ticking, it seems that investors might start demanding that Henri Termeer tells them what is going on.

There is still time here. It just isn’t endless time.

JON C. OGG

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