Genzyme''s bid to acquire Bioenvision fails, for now

12 June 2007

Shareholders of Bioenvision Inc have dumped a $345 million acquisition bid by biotech pioneer Genzyme Corp.

The news comes amidst disappointing phase 3 results of two of Genzyme''s pipeline compounds. Two of its experimental drugs, one for severe diarrhoea, the other for pain caused by osteoarthritis in the knee, also stumbled badly in high-profile clinical trials.

Genzyme, which has built itself into one of the world''s largest biotech companies on the success of enzyme replacement drugs for patients with rare genetic disorders, suffered a setback on both counts and the market is split on the biotech company''s future.

Genzyme seems to have miscalculated the amount of resistance it would face and never moved to negotiate with dissenting shareholders.

"We haven''t heard from them, and we never heard from them," said Steven Rouhandeh, chairman of New York-based SCO Financial Group, who wrote an open letter to Bioenvision management the day the deal was announced. SCO holds 13 per cent of Bioenvision.

Genzyme offered $5.60 a share for Bioenvision common stock in late May, leading to resentment among common shareholders. The revolt spread, forcing Genzime to extend the offer with only 20 per cent of common shares, or 11.1 million on offer to Genzyme.

On July 10, the percentage of tendered shares dropped further to 12 per cent, or 6.9 million.