Genzyme to Bioenvision Board: Acquisition Offer Price Will Not be Raised

With shareholders of New York-based Bioenvision (NASDAQ: BIVN) set to vote in one week on a controversial proposed merger with Genzyme (NASDAQ: GENZ), the Cambridge, MA-based biotech giant reiterated today that it would not raise its offer for shares of the New York firm.

In a letter to the Bioenvision board, Genzyme President Mark J. Enyedy wrote that the company wanted to put an end to any speculation that the offer would be raised above the $5.60 per share price set in a merger agreement hammered out in May. “We believed $5.60 per share was a full and fair price for the company then, and we believe that to be the case now,” Enyedy wrote.

The fairness of the price has been the subject of much discussion and debate since the deal was first announced. Various individual and institutional Bioenvision shareholders have campaigned against the deal, on the argument that it severely undervalues the firm, have called for Bioenvision board to be revamped, and have argued that Genzyme’s current rights to Bioenvision’s leukemia drug clofarabine—the big prize in the would-be merger—should be revoked. Meanwhile, a number of class-action and individual lawsuits have been brought against both Genzyme and Bioenvision related to the deal.

In today’s letter, Enyedy outlined Genzyme’s arguments in favor of the $5.60 price. Among them:
—The price represents a 44 percent premium over average for Bioenvision in the 60 days leading up to the May agreement. (Critics have countered that the price at that time was artificially depressed, due to a recent sale of some 8 million shares to finance clinical trials of clofarabine.)
—Bioenvision has no other acquisition offers on the table.
—Should it remain an independent company, Bioenvision faces challenges including uncertainty that it will obtain projected regulatory approvals for clofarabine, the need to raise significant capital to support operations until the company becomes profitable, and the potential that the pending litigation could drain the firm’s financial and human resources.

Genzyme says it plans to stick with Bioenvision whether or not shareholders approve the merger. “Should Genzyme not garner the majority support from shareholders for this merger,” the company said in a press release, “it is committed to playing an active and constructive role as a significant long-term shareholder of Bioenvision.”

Shares of Bioenvision closed today at $5.26, down from yesterday’s close of $5.43.

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