Parlez vous ‘Deal’? Sanofi-Aventis’ Big Takeover Rumors

Is there another mega pharma deal in the works? A recent report in the French business newspaper Les Echos is sparking speculation that Sanofi-Aventis is on the hunt. The newspaper recently said Sanofi’s new chief executive, Chris Viehbacher, was working on a big, possibly hostile takeover of a U.S. company that would have cost tens of billions of dollars.

In the end, the deal was deemed too risky by Sanofi’s largest shareholders, which include Total SA and L’Oreal, according to the June 11 Les Echos report.

Some obvious takeover targets include Bristol-Myers Squibb, because the two companies already have an existing partnership developing Plavix, the blood clot medication. Amgen is another possible takeover candidate, because the aging Sanofi could use the biotechnology company to replenish its development pipeline.

European bankers say taking over a mammoth company such as Amgen which has a $51 billion market value, could jeopardize Sanofi’s investment-grade credit rating because the French company may need to borrow more money to pull off the deal. A successful bid would likely require a hefty premium, weighing down Sanofi’s balance sheet even further. Sanofi has a market value of $90 billion.

Sanofi denied that it had been working on such a deal.

A more likely scenario is that Sanofi would go after smaller prey, such as Allergan, which makes Botox and has a market value of $14.1 billion. Or, perhaps Biogen Idec, the drug maker where Carl Icahn has been successfully agitating for seats on the board. In the fall of 2007, Icahn prodded Biogen, which has a market value of $14.8 billion, to put itself on the block and Sanofi was mentioned as a potential bidder.

Icahn may find a French suitor after all.