As our sources predicted Friday, Genzyme’s tender offer for New York-based Bioenvision has fallen far short of its goal, Genzyme confirmed this morning. However, the Cambridge biotech giant is not giving up in its efforts to acquire Bioenvision stock and has decided to extend its offer until July 10.
The failure of many Bioenvision common stock holders to accept the offer of $5.60 a share by this morning’s deadline is a clear setback for Genzyme. According to its press release, Genzyme received preliminary tenders for 26 percent of Bioenvision’s common stock. That was well under its 50 percent target figure, which the company has now decided to waive.
Adam Shay, a Bioenvision stockholder opposed to the deal, put up a website last month to make the case against the Genzyme takeover. The main issue was that the $5.60 per share price, in the minds of Shay and other stockholders opposed to the deal, dramatically undervalued the potential of the company and its leukemia drug clofarabine, which is awaiting approval by the EMEA and which some analysts expect to achieve sales of up to $1 billion per year. Shay was happy about this morning’s news, which showed little support for the Genzyme offer. “Originally the management of Bioenvision [which previously had approved the Genzyme offer] tendered 24 percent,” he says, “so they basically only got 2 percent of the shareholders beyond management—so not very many people tendered their shares.”
Shay was hardly the only force against the Genzyme bid. Leading the opposition was SCO Capital, a New York asset-management group that owns roughly 13 percent of Bioenvision common stock. SCO President Jeffrey Davis told me on Friday that the offer would go down, and his assessment proved correct.
For his part, Shay was skeptical about whether the extended deadline would change the overall situation: “I don’t see any additional enticement for shareholders during this extended tender offer. It is the same offer. I don’t understand why they’d expect people to do it now when they didn’t initially.”
I’d have to agree with this assessment. Genzyme is now faced with some choices. Either it can accept being a minority shareholder of Bioenvision, or it can try to take control as it originally intended. If it wants to go the latter route—and that’s what makes the most sense to me—Genzyme should seriously considering ponying up more for what by all appearances is an undervalued company.
A Genzyme spokesman had no comment other than to refer to the press release.
