Sanofi stalks Medivation with $9.3bn cash offer
US drugmaker spurns bids
SANOFI, the French drugmaker under siege for its lacklustre pipeline of new medicines, made public an unsolicited offer to buy Medivation for about $9.3 billion (R134.1bn) in cash to gain experimental cancer therapies.
The proposed purchase price of $52.50 per share for San Francisco-based Medivation represented a premium of more than 50 percent to the target’s two-month average price prior to takeover rumours, Sanofi said in a statement this week. The US drugmaker has thus far spurned Sanofi’s private advances.
Shares of Medivation rose to $55 in pre-market trading at 6.06am New York time yesterday, topping Sanofi’s bid in an indication that investors expect a higher offer. The stock closed at $52.05 on Wednesday.
Patent battle
Sanofi needs new medicines to spur growth as its blockbuster Lantus insulin ages and a new cholesterol drug faces a patent battle. Medivation has one marketed medicine for prostate cancer called Xtandi and two additional oncology products in clinical development.
The company might also draw interest from AstraZeneca or Astellas Pharma, Eric Le Berrigaud, an analyst at Bryan Garnier & Company in Paris, said.
Medivation chief executive David Hung declined to meet with his Sanofi counterpart and said the company’s board had no interest in discussing the transaction, according to a letter by Sanofi chief executive Olivier Brandicourt that the French drugmaker made public yesterday.
Brandicourt put the all-cash proposal in a letter to Hung dated April 15. Medivation only acknowledged its receipt.
“We do not understand the delay in responding to our letter,” Brandicourt wrote. “The price we put forth represents a very substantial premium, and it would be all cash without any financing condition. In these circumstances, we believe it is appropriate to make this letter public, which we are doing today (Thursday).”
Medivation hired defence advisers after it had received preliminary interest from potential buyers, people familiar with the matter said last month. Medivation, which focuses on treatments for hard-to-cure cancers, was seeking a higher price than the initial proposals had indicated, the people said.
Switzerland’s Novartis might be able to extract more value than Sanofi by acquiring Medivation, specifically in terms of boosting its earnings per share next year, Sam Fazeli, an analyst at Bloomberg Intelligence, said.
Germany’s Bayer might also find the US company attractive, he wrote. Spokesmen for Novartis, Bayer and Astra declined to comment.
Sanofi, which has a market value of about € 101bn (R1.6 trillion), said its nonbinding proposal would not be contingent on any financing conditions. The stock fell 1.7 percent to € 75.73, the lowest in two weeks, at 10.04am in Paris yesterday.
Other drugmakers are ahead of Sanofi in cancer. Roche, the largest producer of cancer drugs, and London- based AstraZeneca are expanding their oncology portfolios.
Like Medivation, the pharmaceutical firms are developing so-called immuno-oncology treatments that harness a patient’s immune system to target tumours. Medivation is also developing pidilizumab, another immuno-oncology drug, to be used as a treatment for blood cancers. The company is working on talazoparib for the treatment of breast cancer.