Medivation agrees to $10bn takeover talks
An employee gives informations to visitors at the stand of French drugmaker Sanofi as a screen bearing informations on the stock market is seen during the Actionaria shareholders fair in Paris on November 21, 2014. AFP PHOTO ERIC PIERMONT©AFP
Medivation, the US biotech company, has agreed to hold talks about a $10bn sale with large global pharmaceutical groups including France’s Sanofi, ending a multi-month hostile pursuit that saw the latter attempt to replace its target’s entire board.
Medivation, the maker of the world’s best-selling prostate cancer drug, said on Tuesday that it had rejected the latest takeover overture from Sanofi, which is actively trying to bolster its position in oncology.
Sanofi’s most recent offer valued the California-based company at $58 a share along with certain contingent value rights for future sales of Medivation’s portfolio worth up to an additional $3 a share. In April Sanofi offered $52.50 a share in cash, or $9.3bn.
One person close to the deal talks said that Medivation rejected Sanofi’s $58 offer last week, but offered the French company the opportunity to sign a confidentiality agreement after striking similar arrangements with two other suitors, Pfizer and Celgene.
Xtandi, Medivation’s blockbuster prostate cancer drug, is forecast to generate roughly $5.7bn in global revenues by 2020 and the company also has two pipeline drugs for the treatment of breast cancer and blood cancer.
Kim Blickenstaff, chairman of the Medivation board, said that the biotech company had “significant scarcity value as one of the only profitable, commercial-stage oncology companies”. He added that the Medivation board “remains committed to objectively considering all avenues that may enhance our ability to deliver superior value”.
Shares in Medivation closed 2.7 per cent higher in New York at $61.76, giving it a market value of more than $10bn.
Sanofi, which had a market value of €96bn at the close of trading on Tuesday, separately confirmed it was among the parties that had entered into a confidentiality agreement with Medivation. The French company offered its own chronology of events, saying it had told Medivation last week it would only increase its offer upon signing the private agreement and being given access to more information. Sanofi also agreed to withdraw a proposal that had seen it try to drum up support among Medivation shareholders to overthrow the entire company board.
Olivier Brandicourt, Sanofi’s chief executive, said his company’s increased offer reflected the “in-depth analysis of the benefits and value creation potential of a combination. We look forward to discussions with Medivation on a combination which we believe is the most value creating transaction for both companies’ shareholders.
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Acquiring Medivation would help Mr Brandicourt meet his goal of rebuilding Sanofi’s cancer drugs business to offset the decline in the group’s diabetes unit. The former Pfizer and Bayer executive has made dealmaking a key pillar of his strategy to strengthen the pharmaceutical company since taking over last year.
Sanofi last month completed a €22.8bn asset swap with Boehringer Ingelheim, which allowed the French group to trade its animal health unit and gain a new consumer-health focused business as well as a €4.7bn cash payment.
Pharma M&A is down 33 per cent so far this year compared with the same period last year, according to Dealogic, as jittery markets and political instability in the US and Europe have hit the confidence of senior executives.
A total of $188bn worth of deals have been announced in the healthcare sector in the first half of 2016, compared with $279bn in the first six months of 2015, as fewer mega deals were announced, according to Dealogic data.