There has been a lot of news about Genzyme (GENZ) being considered as a takeover candidate by Sanofi-Aventis (SNY). Typically, rumors are simply that, nothing more than prattle about a washed up company that has little or no life remaining. However, we have demonstrated that discussions of Genzyme being taken over are not so far fetched.
On October 17, 2009 (article link), we had only four companies that were on our Nasdaq 100 Watch List that was within 20% of their respective 52-week lows. This was in contravention to the overall market; which was racing higher every day. So compelling were the companies on the list that we felt it was necessary to give mini-profiles on their value propositions.
Genzyme was one such company that was on that list. We included Genzyme as the last company we profiled since we felt that it was “…a far superior value proposition.” This was despite the fact that Genzyme was the farthest from the new low among the companies on the list.
On October 30, 2009 (article link), we weren’t surprised that drug and medical device makers dominated our list of companies near a new low. In that posting to our site we said, “The continued undervaluation of these companies makes them prime targets for acquisition…” Genzyme was on the list and trading at $50.60. The performance of the stocks that were on the on the October 30 watch list is as follows:
The average gain for the group was 15.32% in 9 months. The worst performing stock has been Gilead Sciences (GILD) with a decline of 22.21%. The best performing stock has been Biogen (BIIB). Our sanguine view on Gilead Sciences may be worth reviewing since it has fallen so much since October 30, 2009.
Genzyme has already indicated that they’re not going to accept the Sanofi-Aventis. This opens the door for competing bids, which should push the price up. Our view at this time is that Genzyme is strictly a speculation at best given the rise of nearly 33% since our mention of a takeover candidate in October 2009.
Disclosure: No positions