(Adds background, analyst, updates share price)
By Jan Lopatka
PRAGUE, July 22 (Reuters) - Czech financial group PPF gave
up the race to take over generic drugs maker Zentiva <>
on Tuesday, clearing the field for shareholders to weigh the
merits of a competing bid from Sanofi-Aventis of France.
PPF said it planned to withdraw its bid for Zentiva, which
provoked a counter-offer from Sanofi <SASY.PA> valuing the firm
at 40.04 billion crowns ($2.77 billion).
PPF, owned by Petr Kellner, a businessman believed to be the
richest Czech, offered 950 crowns per share, while Sanofi bid
1,050, raising investors' hopes of a bidding war that drove the
stock to this year's high of 1,174 in June.
"PPF Group does not intend to participate in a bidding war
with Sanofi-Aventis," PPF said in a statement.
"The decision was influenced by some doubts about the real
value of the company and also by recent steps taken by Zentiva's
management," PPF said without elaborating.
Shares in Zentiva slumped 5.5 percent after the news to
1,065 crowns, just 1.4 percent above Sanofi's competing bid, but
later pared losses to trade 4.3 percent lower at 1,079 crowns at
1322 GMT.
Sanofi, the world's third largest drug maker by sales which
makes mainly original cardiovascular, thrombosis, metabolism and
oncology drugs, now holds 24.9 percent in Zentiva. PPF holds
19.2 percent.
OPEN DOOR
Sanofi's bid is conditional on gaining over 50 percent
interest.
If it succeeds, the maker of drugs such as the thrombosis
treatment Lovenox would get a bigger foothold in the mostly
growing central and eastern European markets and in generics.
Analyst Josef Nemy of Komercni Banka in Prague rated
Sanofi's chances of success at 50-50. "It's possible now that
PPF could sell its stake," he said.
Generics traditionally have been shunned by large
pharmaceutical companies but is now seen as a path to tap
booming emerging markets.
Zentiva among others focuses on cardiovascular disorders,
inflammatory conditions, pain and nervous system diseases. It
employs over 6,000 people, a fraction of Sanofi's 100,000 global
workforce.
A Sanofi spokesman reiterated his firm's offer would close
on Sept. 19.
"We consider that the price we offered reflects a fair
valuation of the laboratory," he said.
Analyst Barbara Janosi of KBC Securities said she would
recommend Sanofi's bid to shareholders.
"Based on the fundamental value of the stock... Sanofi is
already offering a premium."
Analysts said the Sanofi bid valued Zentiva at around 23
times forecast 2008 earnings, above the central and eastern
Europe average of around 20.
A spokeswoman for Zentiva had no immediate comment and an
investment relations officer was not immediately available.
Zentiva earlier reported expectations of a 32 percent rise
in first-half revenue to 8.9 billion crowns, driven by its newly
acquired Turkish unit.
It will report full first-half results on Aug. 4.
(Additional reporting by Michael Winfrey and Jason Hovet in
Prague and Noelle Mennella in Paris; Editing by David Cowell)
