November 9, 2010
Genzyme & Sanofi: Penpals
Sanofi and Genzyme have been exchanging letters. In the first one, Sanofi's CEO Christopher Viebacher sent a letter to Genzyme CEO Henri Termeer. In the letter Viebacher makes the following points:
First, you indicated that you believe that the Genzyme Board can, at any time, opt to immediately stagger the terms of its members, extending the terms of two‐thirds of Genzyme's current directors for an additional one to three years. ...
Second, you stated that the Genzyme Board retains the ability to adopt a "poison pill". As you are well aware, if adopted, the poison pill would prevent Sanofi-Aventis from acquiring Genzyme, regardless of your shareholders' support for a transaction.
Third, you indicated that the Genzyme Board may wield the Massachusetts anti-takeover statutes in a manner that would, as a practical matter, prevent Sanofi‐Aventis from acquiring Genzyme without the cooperation of Genzyme's Board, notwithstanding your shareholders' support of a transaction.
Since the stockholders destaggered the Genzyme board in 2006, presumably Genzyme would stagger the board through a bylaw amendment adopted by the board. In his letter, Viebacher suggests that taking these defensive actions would be inconsistent with "maximizing shareholder value." I suppose he wants Termeer to get concerned that he might violate his fiduciary duties as a director of a MA company should he not immediately agree to a sale of Genzyme to Sanofi. Well, Termeer has little to fear. As I've written before, MA companies are very management friendly and have written out of the law any of the pesky obligations put on boards by Delaware decisions like Revlon and Unocal. Just-say-no is alive and well in Massachusetts. Clearly, the Genzyme board is engaged and informed. That's basically going to be enough. The brush off letter from Termeer back to Viebacher seems to indicate that Termeer knows this, too.
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