(Adds Zentiva statement, Prague dateline, updates prices)
By Sudip Kar-Gupta and Jana Mlcochova
PARIS/PRAGUE, June 18 (Reuters) - French drugmaker
Sanofi-Aventis <SASY.PA> plans to make a 40.04 billion crown
($2.57 billion) offer for Czech drugmaker Zentiva <>,
trumping a bid from financial group PPF.
The move would take Sanofi deeper into the field of generic
drug production, an area which has traditionally been shunned by
large pharmaceutical companies but is now receiving increased
interest as a way to tap booming emerging markets.
Sanofi -- already a key shareholder in Zentiva, with 24.9
percent -- said on Wednesday it planned to offer 1,050 Czech
crowns per Zentiva share.
That pitted Sanofi against Czech financial group PPF, which
formally launched a 950 crown per share offer on Tuesday, and
analysts said a bidding race may begin.
Zentiva shares rose 6.7 percent to 1,110 crowns by 1315 GMT,
above both bids and the stock's highest level since October
2007. It was the biggest gainer among large capitalisation
shares in central Europe.
Sanofi traded 1.4 percent up at 42.63 euros.
Sanofi offered a premium of around 10.5 percent to PPF's bid
and the French company, which is the world's third-largest drug
maker by sales, said buying Zentiva made strategic sense.
"Sanofi-Aventis is already established in the various
markets where Zentiva operates. The intended acquisition of the
control of Zentiva carries a strong strategic rationale," Sanofi
said in a statement.
Zentiva said its board would meet on the new offer, and
urged shareholders not to take any action for the moment. On
Tuesday, Zentiva told shareholders to take no action on PPF's
bid, adding it would call a shareholder meeting.
The Sanofi bid valued the company at 23.2 times forecast
2008 price/earnings, according to broker Patria Finance, above
the central and eastern Europe drug sector average of 20.3.
Patria advised investors to sell, but some other analysts
said PPF may try to drive the price up.
"I don't think PPF will accept this Sanofi bid. If you look
at for how much they bought their stake, that bid still seems
too low," said Milan Vanicek, an analyst at Atlantik FT.
PPF entered Zentiva in 2005 as a portfolio investment at
prices around 1,025 per share.
It has since raised the stake and changed its approach as
the stock plunged from all-time high of 1,571 crowns last year,
following worse-then-expected results, mainly due to poor
performance in Romania. PPF, together with Italian insurer
Generali <GASI.MI>, owns 19.2 percent of Zentiva.
PPF is likely to raise its own bid either in an effort to
gain control of the company or to prompt Sanofi to raise its bid
and then sell out, Vanicek said.
Zentiva is a dominant supplier of generic, or unpatented,
drugs in the Czech Republic and Slovakia. It also has
subsidiaries in Romania and Turkey.
GENERIC DRUGMAKERS IN VOGUE
PPF, controlled by the Czech Republic's richest businessman
Petr Kellner, said it would proceed in line with the terms of
its own offer, and added it may issue a statement later on
Wednesday. Its offer allows for an increase in the bid, but also
for a withdrawal of the offer in case of a counterbid.
Sanofi's move on Zentiva follows a surprise $4.6 billion
agreed bid last week by Japan's Daiichi Sankyo Co Ltd <4568.T>
for top Indian generics company Ranbaxy Laboratories <RANB.BO>.
Big pharmaceutical groups have encountered a wave of
product setbacks and political uncertainty that have sent many
of their stocks to multi-year lows.
Acquiring companies that specialise in making low-cost
generic drugs would allow them to diversify, target developing
markets and seize on international efforts by governments to
promote generics to cut healthcare expenses.
(Additional reporting by Ben Hirschler in London and the Prague
bureau; Editing by Quentin Bryar, Paul Bolding)
