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In March 2006, Sanofi-Aventis acquired the 24.9% interest in Zentiva for $523.9 million from the investment company Warburg Pincus.
In mid-June, Sanofi-Aventis offered 1,050 koruna for Zentiva, trumping the 950 koruna per share bid offered by Czech financial company PPF Group NV. Sanofi-Aventis' offer values Zentiva at 40 billion koruna ($2.7 billion), including the stake already owned by Sanofi, while PPF's offer works out to a total of $2.3 billion. PPF owns almost a 20% interest in Zentiva. The bidding period, which began on July 11, lasts until September 19.
Sanofi-Aventis' offer represents a premium of 15% to Zentiva's closing price of April 30, the day before PPF offered to acquire Zentiva.
Zentiva noted that with the operating performance improving, it expects to deliver strong 2008 results. The company expects revenues to increase around 20% and achieve EBIT margin of above 15%, excluding exchange rate effects.
According to Zentiva, the outlook for the generics market is robust with strong growth forecast in the Central Eastern European markets in which it operates. The company believes, it is well placed to participate in further expected industry consolidation and shareholders could miss out on participating in the benefits of a synergistic transaction.
Some of the best-selling drugs of Zentiva include Simvacard, a generic version of Merck & Co.'s (MRK | Quote | Chart | News | PowerRating) cholesterol medication Zocor, Helicid, a generic version of AstraZeneca Plc's (AZN | Quote | Chart | News | PowerRating) antiulcerant Prilosec, Ibalgin, and Celaskon, a Vitamin C supplement to name a few.
At a time, when Sanofi-Aventis is plagued by patent expiration and generic threat to its blockbuster drugs, acquisition of Zentiva will help to fill up the gaping hole in its product portfolio. Last year, Zentiva notched $1.1 billion in sales, while Sanofi-Aventis sales totaled $43.01 billion.
According to Andrew Weiss, an analyst with Bank Vontobel, acquisition of Zentiva will enable Sanofi-Aventis to sell their products in high-growth markets like Russia, Eastern Europe and Turkey, in which Zentiva has exposure.
Will the french dug maker Sanofi-Aventis sweeten its offer for Zentiva or abandon the bid? .... Only time will tell.
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