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Medivation softens on Sanofi takeover and opens its books

Due diligence agreement follows similar deals with Pfizer and Celgene

Sanofi 

Sanofi hopes of acquiring Medivation have taken a step forward after the cancer firm agreed to open its books following the signing of a confidentiality agreement - but it is not alone in its acquisition plans.

Medivation has been the target of the French pharma group's overtures for several months, with rumours of its interest before Sanofi went public with an all-cash offer. 

This move was prompted by Medivation's refusal to play ball - but relations between the two companies now seem to have thawed markedly.

Sanofi says it will be provided “due diligence access and confidential information” - but the company admits that Medivation makes clear that other companies will have the same opportunity “to participate in a process relating to a potential transaction”.

Pfizer, Novartis, Celgene and AstraZeneca have all been mentioned in media reports as possible bidders.

A Sanofi statement said: “A dataroom will be opened and management meetings scheduled in the near term.”

Sanofi has already upped its offer for the company. This comes after its target's withering assessment that Sanofi's initial $52.50 per share bid “substantially undervalues Medivation”. 

That $9.3bn takeover bid was, the US company said, opportunistic and showed Sanofi was trying to "seize value" from its stockholders.

Sanofi subsequently pushed its offer up to $58.00 in cash and $3.00 in the form of a contingent value right (CVR) which relates to the sales performance of Medivation's PARP inhibitor talazoparib, but this too was rejected prior to signing the confidentiality agreement.

Negotiations around the CVR are important because pivotal data on talazoparib is scheduled to be published in the first half of next year and could boost what is already considered to be a promising oncology pipeline, particularly in liver and breast cancer.

The main prize at present for Sanofi is the fast-growing prostate cancer drug Xtandi (enzalutamide), which made $1.9bn in sales last year, and which Medivation is attempting to move into a larger population of prostate cancer patients.

Sanofi chief excutive Olivier Brandicourt said: “We are pleased to have the opportunity to engage with Medivation. Our willingness to increase our offer is driven by our in-depth analysis of the benefits and value creation potential of a combination.”

He added Sanofi was looking forward to discussions with Medivation about a “value-creating transaction for both companies' shareholders” which would offer the firm “an outstanding platform to further grow its oncology franchise”.

Article by
Adam Hill

7th July 2016

From: Sales

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