Sanofi and Genzyme: They'll do it the hard way

Negotiations for a friendly merger between Sanofi-Aventis and Genzyme, which I discussed here a month ago, now seem to have fallen apart.

Sanofi's CEO has written a "bear hug" letter in the first instance to the Genzyme CEO but in reality to the Genzyme shareholders. The idea is to get the shareholders ticked off that their management is standing between them and a nice pay-out.

Here's a discussion from two and a half years ago about the art of giving a bear hug.

A little history. Back in 2004, a company then called Sanofi-Synthélabo made a 47.8 bn euro for Aventis, a Strasbourg based concern. At first, Initially, Aventis spurned the bid, and a three-month battle resulted. The merger did in time come about, but the price increased, from the original 47.8 billion to 54.5 billion euros.

The French government played a big role in that imbroglio. The government was concerned that a Swiss company (Novartis) would step in as Aventis' white knight if Sanofi-Synthélabo didn't raise its bid. That would lead to Aventis falling under the control of foreigners. Indeed, non-EU foreigners! (The Swiss are only geographically part of Europe.)

The lesson: there is good reason, based on their fiduciary obligation to their shareholders, for the management of Genzyme to make this difficult for Sanofi. They shouldn't make it impossible, but they should make it difficult.