Markets

The Sanofi-Genzyme Takeover Enters Its Jerry Springer Phase

By Jim Edwards

Updated on: September 3, 2010 / 10:09 AM EDT / MoneyWatch

The CEOs of Sanofi-Aventis (SNY) and Genzyme (GENZ) have begun boiling down their proposed takeover differences to their most fundamental business level: personal insults. Sanofi boss Chris Viehbacher essentially called Genzyme's Henri Termeer an old fart who's lost it; Termeer said the inexperienced Viehbacher is mendaciously telling his shareholders he's buying a bad property.

It's an interesting set of positions given that neither has described Sanofi's proposed $69 a share/$18.5 billion bid as "hostile."

Separately, it's becoming clear that the difference between the two sides depends on their different opinions of the value of Campath, Genzyme's proposed drug for multiple sclerosis. Revenue estimates range from $675 million a year to $3 billion a year. (BNET readers first learned of Campath's blockbuster potential -- and the controversial pricing politics required to get it onto the market -- in April. You're welcome!)

But first, the gossip. Viehbacher is emerging as the bitchier of the two corporate leaders. He told the Wall Street Journal:

Genzyme's shareholders have to look at who is running the business. I mean, you've clearly got more or less a founder-CEO who's been there quite some time and you have to decide whether that's the right person to really bring new value or not.

That's a not-so-coded reference to Termeer's age. He's 63 64. In return, Termeer called Viehbacher "a competent younger executive who's trying to change that company." "Competent"? "Younger"? Miaow! (Viehbacher is 49). Termeer added:

"We're all grown-ups," he said. "It's corporate talk. It's not very classy to say these things. It's a fine line. When you tell your shareholders you're going to spend $18.5 billion for a bad property, it doesn't make sense."

Arguments over who is and isn't "classy" are usually the staple of the Jerry Springer show, not corporate boardrooms. Termeer said the two had talked, but gave this guarded appraisal of their personal interaction:

"It was a pleasant call," Termeer said. "We know each other and it was not unpleasant. It is not unpleasant now."

More seriously, we now have an idea of how valuable everyone thinks Campath will be. Here are the estimates, per Dow Jones Newswires:

Genzyme: Campath will immediately capture a quarter of the global MS drug market, which it estimates to be $13 billion in 2012, putting annual sales well above $3 billion.
Robert Baird: analyst Christopher Raymond calculates that Campath's sales will hit $843 million global revenue by 2020.
Deutsche Bank: estimates peak sales of about $800 million in 2018.
Sanford Bernstein: projects 2015 global Campath sales of $675 million.

The first thing we can conclude from this dart-throwing exercize is that clearly no one knows how valuable Campath is. If there was a concrete indicator as to its future value these estimates would not be all over the map.

A similar situation -- in which respected Wall Street analysts and the companies they cover all proved how wrong they can be -- occurred with Eli Lilly's Effient anticoagulant and Sanofi's Multaq atrial fibrillation drug.

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