Could it be time to talk in the long-running saga of Sanofi-Aventis SA's
The two chief executives at the center of a takeover battle that has transfixed the drugs industry for the last six months will bump into each other twice in January at high-profile events on either side of the world.
On January 11, Genzyme CEO Henri Termeer and Sanofi's Chris Viehbacher are set to give back-to-back presentations at the annual JPMorgan Healthcare Conference in San Francisco.
Two weeks later, both men are scheduled to attend the January 26-30 World Economic Forum annual meeting in Davos, Switzerland.
In between, Sanofi's extended tender offer of $69 a share for Genzyme -- rejected as nowhere near enough by Termeer -- will expire on January 21.
It's about time they sat down, said Karl Heinz Koch, an analyst at Helvea, who believes the chance of Sanofi clinching a deal at the current price is infinitely small.
Viehbacher and Termeer have so far sat down together only once, on September 20, to discuss the bid situation. Termeer said recently that he has bumped into Viehbacher on a number of occasions and that the tone was always friendly, though the extent to which they could discuss any deal is limited.
Substantive talks would require a more formal process but a quiet word in informal surroundings might help with the mood music. A source familiar with the situation said the two CEOs would have maybe a polite nod in the hallway but no set meetings were scheduled.
MORE WILLING TO TALK?
There have been tentative signs in the past month that Termeer could be more willing to come to the table, in the absence of any alternative bidders for the U.S. specialist in rare diseases.
Termeer has signaled he's more willing to talk and the possibility of treating Campath as a flexible item gives some ground to talk, said Koch.
Advisers from both companies have been discussing a way to bridge a gap over prospects for Campath, Genzyme's most promising drug, through a deal structure that would include contingent value rights (CVR), according to filings.
A CVR would offer Genzyme shareholders an additional payout based on Campath meeting certain revenue targets.
At the heart of Genzyme's argument is its estimate that its Campath drug for multiple sclerosis could generate peak annual sales of $3.5 billion, compared with a figure of $700 million underpinning Sanofi's offer.
Viehbacher has said he could consider paying more for Genzyme, but only if he is shown good reason for doing so.
Buying Genzyme would give the French group a new area for growth, the high-margin business of rare diseases, as it seeks to diversify to make up for patent losses that will take out roughly a third of its 2008 sales base through to 2013.
The market is still betting on an improved offer, with Genzyme shares trading around $71. Investors and analysts have said a deal could be reached at $75 to $80 per share, although a deal involving a CVR would complicate the situation given uncertainty over potential delayed extra payouts on Campath.
(Additional reporting by Jessica Hall in Philadelphia and Toni Clarke in Boston; Editing by Andrew Callus)