Genzyme Chief Signals Departure as Takeover Looms

Genzyme’s chief executive could step down next summer and ease a takeover of the biotechnology business by Sanofi-Aventis of France.

Source: Genzyme

Henri Termeer said he would be ready to retire following confirmation of late-stage trial results for its Campath multiple sclerosis drug that are due in mid-2011.

Mr Termeer has rejected a $69 a share offer from Sanofi-Aventis that values Boston-based Genzyme at $18.5 billion, and said he would not meet the French group’s representatives or permit due diligence without a significantly higher bid.

He indicated a fairer valuation would be closer to Genzyme’s share price of $80 before the 2008 financial crisis, though Genzyme has suffered manufacturing problems since then.

Mr Termeer said: “We can very well operate independently. I’m not in any way offended (by the Sanofi-Aventis bid). They have to recognize our value rather than be opportunistic.”

Mr Termeer, who joined the company as president in 1983 and is by far the longest-serving chief executive of a mid-sized or large pharmaceutical company, has been seen as an obstacle to a takeover.

But in a rare interview, he indicated a greater openness to a Sanofi-Aventis takeover than in the past, provided the price was increased.

He said the board had held no discussions with an alternative “white knight” buyer. “The company is recovering in a significant way, and pulling in value.”

He said any bid should reflect that value plus a control premium. “It’s not that complex an equation to figure out.”

Mr Termeer, 65 next year, said there was nothing in Genzyme’s current statutes imposing a retirement age, but he indicated he was thinking of a change.

He said: “I have loads of things that I could spend more time on but I love Genzyme."

“We have to get into a very good place. There will be a moment to step back. If a transaction happens, it is very simple.”

He suggested he was ready to relinquish his executive role while remaining chairman in the event of a takeover.

“This is a process, a dance. Chris (Viehabacher, head of Sanofi-Aventis) has indicated he’s in no hurry and I’m not in a hurry.”

Regulatory filings show that Genzyme’s non-executive directors each paid more than $400,000 a year including salary and stock options, a level that has raised concern they could be reluctant to approve a takeover.

But Mr Termeer stressed the packages were in line with comparable companies, and argued that the directors were fiercely independent.

Earlier this year Mr Viehbacher accused Genzyme of “stonewalling”, adding that he “would expect shareholders in general to make their voices heard”.