Sanofi seals Zentiva deal with improved offer
pharmafile | September 23, 2008 | News story | Sales and Marketing | MA, Sanofi, generics
Sanofi-Aventis' acquisition of Czech generics firm Zentiva is back on, after the pharma company increased its offer by nearly 10%.
The takeover bid had been foundering, with Zentiva's board advising shareholders to reject Sanofi's initial offer and accusing the company of undervaluing its business.
Sanofi has increased its offer from CZK 1,050 to CZK 1,150 per share, which values the company at 1.8 billion euros.
Zentiva's chief executive Jiri Michal said he was delighted to be able to put the recent period of uncertainty behind him by reaching an agreement with Sanofi that will strengthen his company.
"We believe that the Improved Offer represents attractive value for Zentiva's shareholders, particularly in light of the current market turbulence," he said.
"We are also convinced that the proposed transaction safeguards the interests of all of our other stakeholders, our customers, suppliers and employees and will ensure that Zentiva has a strong future with access to the resources of the wider Sanofi-Aventis Group."
Michal and other senior members of Zentiva's management have shown their faith in the deal they are recommending by agreeing to sell their shares – nearly 6% of the company – to Sanofi.
The companies' agreement also contains a clause for a 'break fee' of 25 million euros, should Zentiva's board subsequently withdraw its recommendation of the Improved Offer.
Zentiva's Michal had previously said Sanofi's initial offer was "a long way short of reflecting Zentiva's fundamental value" and did not take into account the potential value for Zentiva of making acquisitions of its own.
The generics company saw an upturn in its fortunes over the summer, which quickly put the offer Sanofi made in July below current market rates.
Zentiva's sales in the first half of this year grew by 32% to CZK 8.9 billion (370 million euros), driven by the acquisition last year of Eczacibasi, the third largest Turkish generics company.
Zentiva now claims leading positions in the Czech Republic, Turkey, Romania and Slovakia, and says it is growing dynamically in Poland, Russia, Bulgaria, the Ukraine and the Baltic countries.
Sanofi still requires approval from competition authorities for its offer. The company has won clearance from Russia and Ukraine, but is still waiting on approval for the deal from the European Union and Turkey.
Furthermore, the offer will only stand if Sanofi can increase its stake in Zentiva – currently 24.9% – to more than 50%.
Once the deal is finalised it will significantly increase Sanofi's presence in the central and eastern European generics markets and see the company gain a portfolio of more than 400 products.
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