Sanofi makes public its non-binding proposal to acquire Medivation for $9.3bn
Sanofi has made public its letter to US oncology biopharma company Medivation (not
covered), detailing its non-binding proposal to acquire the company for $52.50/ share,
equating to $9.3bn: a >50% premium to Medivation's 2 month volume-weighted
average price, but only a 1% premium to yesterday's closing price of $52.05. This
follows recent press reports that both Sanofi and AstraZeneca had been looking at the
company. On 17 April, the Sunday Times reported that AstraZeneca had held internal
talks about making a bid, but had yet to make a formal offer. SAN indicated today that
it first approached Medivation on 25 March, however given Medivation's unwillingness
to discuss the offer, SAN made its proposal public today. This follows Bloomberg
reports (12 April) that Medivation turned down SAN's approach.
Medivation would strengthen Sanofi's oncology portfolio
Medivation's primary focus is on oncology, which would mark a shift from an FT report
on 28 February indicating that SAN was looking at acquisitions in rare diseases up to
the size of its Genzyme acquisition ($20bn in 2011). Medivation has 1 marketed drug –
Xtandi (enzalutamide) – for castration-resistant metastatic prostate cancer (CRPC),
which was approved in the US in 2012. It is in Ph III trials for non-metastatic CRPC and
hormone-sensitive prostate cancer, and is also in Ph II trials for hepatocellular carcinoma
and breast cancer. Medivation co-promotes Xtandi in the US and receives collaboration
revenue from partner Astellas based on royalties. It also has talazoparib in Ph III in
gBRCA mutated advanced HER2-normal breast cancer and pidilizumab in Ph III for R/R
DLBCL. MDV4463 in non-alcoholic steatohepatitis is in Ph I. 2022E Bloomberg cons.
revenues for the oncology portfolio total almost $2bn: $1,503m for Xtandi (based on
Medivation collaboration revenue), $236m for talazoparib & $191m for pidilizumab.
We estimate the proposed acquisition would be 8% EPS accretive by 2020E
Sanofi indicated this deal would be immediately accretive to earnings. We estimate
accretion of 8% by 2020E, even assuming no cost synergies given Astellas's role in
global promotion (see Figure 1; based on Evaluate consensus as of 16 April for
Medivation).
Valuation: PT is €78.5, based on 14.3x 2016E Core EPS
Our PT is based on the current 14.7x '16E weighted average sector multiple (excl Novo).