Top two shareholders, including Sanofi-Aventis, launch competing bids for Czech drugmaker Zentiva

19 June 2008

The generic drug space is hotting up, with several companies making bids for several other entities. After Japanese company Daiichi's takeover of India's biggest drugmaker Ranbaxy  (See: Daiichi to make open offer for Ranbaxy on August 8), French pharmaceuticals major Sanofi-Aventis has come out with a counter offer for Czech generic drugmaker Zentiva, only a day after the latter received an offer from its second-largest shareholder Czech financial group PPF.

The Sanofi-Aventis bid of 1,050 koruna (Czech crowns) per share values Zentiva at 40.043 billion koruna, or 1.655 billion euros. Earlier on Tuesday, PPF had launched a 950 koruna per share bid for Zentiva, indicating the offer could be raised or withdrawn in the event of a counter offer. Sanofi-Aventis and PPF are the two largest shareholders in Zentiva, holding 24.9 per cent and 19.2 per cent stakes respectively.

''Sanofi-Aventis is already established in the various markets where Zentiva operates. The intended acquisition of the control of Zentiva carries a strong strategic rationale,'' Sanofi-Aventis stated to push its case.

Analysts expect another offer from PPF, because its own stake had peen purchased at a price close to the Sanofi-Aventis offer, and in the words of one analyst, it is improbable that ''PPF wants to make zero percent profit for two years' shareholding.'' That is, if it sells its stake to Sanofi-Aventis.

With a successful acquisition, Sanofi-Aventis would gain cheaper copies of more than 180 generic medicines, including copies of Bristol-Myers Squibb Co.'s Glucophage diabetes pill and Merck & Co.'s Zocor for cholesterol.
 
Moreover, Sanofi-Aventis asserts that unlike other generic players, Zentiva backs its products with a sales force. In acquiring Zentiva, the company will benefit from higher-margin generic sales in Russia, Poland, the Czech Republic, Romania and Turkey, company spokesperson Jean- Marc Podvin said.

''It's not a shift, it's a continuation of the strategy,'' he added. ''Zentiva is not looked on as a typical generic business, it's more of a branded-generic business.''