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Sanofi Offers To Buy Genzyme

|Includes: SNY, Sanofi (SNY)

I guess general economic worries aren't slowing down merger mania, at least not yet.  There's big action coming in Big Pharma:

Sanofi-Aventis SA said it is offering to buy Genzyme Corp. for $69 a share, or about $18.5 billion in cash.

Cash bids are always nice to see.  Paying $69 per share for GENZ isn't much of a premium over last Friday's closing price of $67.62, so perhaps Sanofi-Aventis isn't expecting any competing bidders. 

A quick glance at GENZ's stats shows an enterprise value very close to its market value.  Bidders often go for a target whose enterprise value is far below its market cap.  Its ROE and EPS are both currently negative, so Sanofi-Aventis (NYSE:SNY) may see some hidden value here that's lost in the fundamentals.  Paying 20x EPS is a heck of a premium when your earnings have gone negative for two quarters.  Does GENZ have something in its pipeline that can help Sanofi regain ground lost to generics?  Time will tell. 

Disclosure: No positions