(Adds Sanofi-Aventis comments, 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 ($2.6 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, whose top selling drug is the anti-thrombotic Lovenox,
against Czech financial group PPF, which formally launched a 950 crown per share
offer on Tuesday, and analysts said a bidding race may begin.
"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 on Wednesday.
Shares in Zentiva, which makes copies of drugs like paracetamol and
ibuprofen, rose 7.4 percent to close at 1,117 crowns, 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 rose 1.05 percent to 42.63 euros by 1524 GMT.
Sanofi offered a premium of around 10.5 percent to PPF's bid and the French
company, which is the world's third-largest drugs maker by sales, said it plans
to finalise the acquisition by the end of 2008.
"The deal will be slightly accretive (for earnings) from the first year of
integration," a Sanofi-Aventis spokesman said, adding the group would finance
the purchase from cash flow.
PPF said it may comment on the Sanofi counterbid later in the day.
ZENTIVA SAYS HOLD OFF
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 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.
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 Noelle Mennella in Paris, Ben Hirschler in London and
the Prague bureau; Editing by Paul Bolding/Elaine Hardcastle)
