French pharmaceuticals giant Sanofi has made a near $10 billion (£6.85 billion) bid for American biotech firm Medivation, which specialises in cancer treatments.
In a letter sent to Medivation on Thursday, Sanofi’s chief executive Olivier Brandicourt offered to buy the San Francisco-based company for $52.50 (£35.96) per share, a deal that would value it at $9.3 billion (£6.4 billion).
The move comes just a few days after Medivation’s boss David Hung told Sanofi that he did not want to sell.
Sanofi isn’t giving up though, saying that its offer “represents a compelling strategic and financial opportunity to drive significant value for the respective companies’ shareholders, employees, patients and caregivers”. Brandicourt added that the price being offered “represents a premium of over 50 per cent to Medivation’s two-month volume weighted average price (VWAP) prior to there being takeover rumours”.
Here’s an extract from Sanofi’s letter to Medivation:
It has been over a month since we first talked and I expressed my view that a combination would make strong strategic sense, and I said we were prepared to make a very attractive proposal. During our first call on March 25, you said that you were unwilling to meet, and in our subsequent conversation on April 3 you said that, after a review with your Board, there was no interest in discussing a transaction. Given your unwillingness to meet or to hear our proposal, we sent you a letter on Friday, April 15, setting forth a proposal (the “Proposal”) to acquire Medivation for $52.50 per share in cash, representing a premium of over 50% to the two-month volume weighted average trading price (VWAP) prior to there being takeover rumours. We have not heard anything from you for almost two weeks, other than an acknowledgment of receipt of our letter.
We do not understand the delay in responding to our letter. 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.
You can read the letter in its entirety here.
Investors in Sanofi haven’t exactly reacted positively to the bid, with shares slipping more than 1.3% in trading on Thursday morning. Here’s how that looks:
If completed, the deal would be the first major pharmaceuticals merger since the collapse of Allergan and Pfizer’s deal earlier this month. The $160 billion deal fell through at the start of April because of changes in tax law that reduced the viability of the merger.
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