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