Genzyme Takeover Deal Will Fail, Predicts Bioenvision Shareholder

6/29/07Follow @bbuderi

Genzyme’s tender offer for New York-based Bioenvision, which expires at 12:01 Monday morning, will not be approved, predicts a large Bioenvision shareholder opposed to the deal. “We’ve heard it’s fallen flat as hell,” asserts Jeffrey Davis, president of SCO Capital, a New York asset-management group focused on life sciences. SCO Capital owns roughly 13 percent of Bioenvision common stock. Davis says he is making the prediction based on communiqués with other large shareholders that indicate Genzyme will not get the approvals it needs from the holders of half of Bioenvision’s common stock. “We’ve heard that they’re not even close to getting 50 percent,” he says.

If Davis’ prediction comes true, it will mark a major setback for Genzyme. Just two days ago, after a motion filed in Delaware Court of Chancery seeking a preliminary injunction to delay the proposed acquisition was withdrawn, Genzyme put out a press release saying it anticipated the deal would be approved. This morning, Bo Piela, Genzyme’s senior director for corporate communications, told Xconomy the company was sticking to that prediction. “All I can do is refer you to the press release,” he says.

Under the terms of the deal, Cambridge-based Genzyme would take control of Bioenvision for $350 million, or $5.60 a share. The main issue for upset Bioenvision shareholders is whether the offer fairly valued the potential of the company’s leukemia drug clofarabine, which is awaiting approval by the EMEA and is predicted by some analysts to achieve sales of up to $1 billion per year.

Davis says that his service on the Bioenvision board two years ago gives him a deep knowledge of the company and what it’s worth. “It ‘s not like we’re some shareholder who does not have intimate knowledge of the drug or the company,” he asserts. “Whether or not Genzyme will ultimately take over Bioenvision is going to be based on the price,” says Davis. “Clearly, we don’t think $5.60 gets the job done, and we’re reasonably optimistic that a lot of other common shareholders agree with us.” To have a deal approved, he adds, Genzyme’s offer will have to go “significantly north of $5.60 a share.”

Echoing Davis’ sentiments, Adam Shay, an individual stockholder, became the public voice of upset shareholders earlier this month when he put up a website (www.rejectgenzymetenderoffer.com) decrying the deal as dramatically undervaluing the company. “I am just a small individual shareholder, basically appalled by the offer that the Bioenvision management and board has decided to accept from Genzyme,” Shay says. He reports that up to 200 people a day have been checking in to view his website and blog.

Today, Shay put the deal as up in the air. “I think it’s going to be pretty close. I’d assume SCO Capital has probably talked to quite a number of institutional investors, which I think is going to tilt the table one way or another. It will be interesting to see how this all plays out.”

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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