Sanofi looks to rebuild oncology franchise with $9.3-billion offer to buy Medivation

Sanofi disclosed Thursday that it offered to buy Medivation for $52.50 per share in cash, or approximately $9.3 billion, as part of the French drugmaker's strategy to rebuild its oncology franchise. Sanofi noted that the bid represents a premium of over 50 percent to Medivation's two-month volume weighted average price prior to takeover rumours surfacing.

"Last November, Sanofi outlined our mid-term strategy which includes rebuilding our position in oncology, one of the largest and fastest growing therapeutic areas in the biopharmaceutical sector," remarked CEO Olivier Brandicourt. "With Medivation's best-in-class offerings in prostate cancer, we believe a combination would benefit patients and, at the same time, generate value for shareholders of both companies," Brandicourt added.

Medivation currently markets Xtandi (enzalutamide), which is approved in the US and Europe for the treatment of metastatic castration-resistant prostate cancer, in collaboration with Astellas. Sanofi noted that Medivaiton also has two further oncology drugs in clinical development, pidilizumab for blood cancers and talazoparib for the treatment of breast cancer. The French drugmaker said that a combination with Medivation "would create a stronger company with a complementary range of offerings to treat prostate cancer across the continuum of care, from urologists to oncologists."

In a letter to Medivation CEO David Hung dated April 28, Brandicourt revealed that Sanofi first detailed its proposal to the former on April 15. However, Brandicourt noted "we have not heard anything from you for almost two weeks... We do not understand the delay in responding to our letter." Brandicourt added "in these circumstances we believe it is appropriate to make this letter public."

According to Sanofi, a deal would be immediately accretive to earnings and would offer value creation opportunities for shareholders.

Last month, sources suggested that Medivation had hired defence advisers after it received preliminary interest from potential buyers, with the company said to be seeking a higher price (for related analysis, read ViewPoints: Medivation steels for a takeover fight – on the off chance one emerges). The Sunday Times recently reported that AstraZeneca held "internal talks" regarding a potential bid for Medivation, but has not yet made a formal proposal.

Bryan Garnier & Co. analyst Eric Le Berrigaud noted that along with AstraZeneca, Medivation may also draw interest from Astellas, with Sanofi possibly facing a lengthy takeover fight. Meanwhile, Bloomberg Intelligence analyst Sam Fazeli suggested that Novartis may be able to extract more value than Sanofi by acquiring Medivation, specifically in terms of boosting its earnings per share next year. Fazeli added that Bayer may also find the drugmaker attractive.

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