Things seem to be moving again with Genzyme’s so-far-stymied attempts to take over New York-based Bioenvision (NASDAQ: BIVN). A little after four in the afternoon on Friday, Bioenvision’s lawyers made an SEC filing calling for a meeting to vote on the proposed merger. The document, which did not specify a date for the special session, included the following bold-faced notice to shareholders:
Your vote is important. We cannot complete the Merger unless, among other things, the holders of a majority of the Bioenvision common stock and preferred stock…vote to approve the Merger Agreement. Failure to submit a signed proxy card or to vote by telephone, via the internet or in person at the Special Meeting will have the same effect as a vote “AGAINST” the approval of the Merger Agreement.
Unless something new is afoot, Bioenvision is not likely to get much response. A quick recap: Genzyme (NASDAQ: GENZ) made a $5.60 per share tender offer to Bioenvision common stockholders last May, seeking to gain control of a majority of the company’s common stock. While backed by the entire Bioenvision board, the offer was opposed by minority shareholders led by SCO Capital of New York, who felt it significantly undervalued the company. When the tender offer closed and the dust cleared in July, Genzyme had only managed to gain control of about 22 percent of Bioenvision stock—almost all of it from the Bioenvision board, several of whom cashed out for big bucks.
That left the key players in a cat-and-mouse game, or maybe it’s a game of chicken. Genzyme has vowed to press ahead, still hoping to win stockholder approval of the deal—but SCO Capital has vowed to resist. Meanwhile, at least five class action lawsuits related to the attempted takeover have been brought against Bioenvision and Genzyme.
Everyone has been mum on the subject for the last month or so. The long silence makes it tough to get a great read on this. But here’s what we know:
— On July 11, SCO filed a letter with the SEC saying it has the rights to two board seats—and that it intends to exercise those rights. It also called for terminating Genzyme’s rights to Bioenvision’s leukemia drug, clofarabine. Genzyme countered that it has assurances SCO does not have board rights. To our knowledge, no action has yet been taken by SCO to pursue the board seats.
— SCO Capital president Jeff Davis has noted in the past that Genzyme never contacted his company to try to work out a compromise.
— Genzyme in recent weeks settled a long-standing lawsuit on an unrelated matter, possibly indicating its desire to clear its slate and focus on the company’s core business of drug development.
So, putting all this together, it’s not hard to speculate that something might be going on with the Bioenvision case. Have the two sides been talking? Tough call. It is highly doubtful that Genzyme is going to get the shareholder votes it needs without upping its offer— the company would have to be doing a corporate impression of an ostrich to believe otherwise given the overriding defeat it suffered the first time around.
If Genzyme is interested in getting on with the business of developing drugs—and not pursuing an ill-fated takeover offer—it would make sense for the company to be trying to reach a compromise with SCO and other large shareholders.
