Influenza vaccine syringes at a Sanofi Pasteur factory
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Medivation says Sanofi's offer undervalued the company "substantially."

By Reuters
May 6, 2016

France’s Sanofi said it could raise its proposed $9.3 billion deal to buy Medivation if the U.S. cancer drugmaker engaged in talks, threatening to go directly to shareholders to oust the board if not.

Sanofi Chief Executive Olivier Brandicourt wrote in a letter to the board of Medivation published on Thursday that the transaction was a priority for the French drugmaker and it was committed to seeing it through.

San Francisco-based Medivation mdvn said on Thursday it had received a letter from Sanofi snynf that “simply restates an inadequate proposal that… substantially undervalues the Company, its leading oncology franchise, and innovative late-stage pipeline.”

Brandicourt said Sanofi had spoken to top Medivation shareholders and the proposal had “overwhelming” support.

“If you engage in good faith discussions with us and demonstrate additional value, we could be in a position to revise our offer,” the CEO wrote. “If you are not prepared to engage with us, we have no choice but to go directly to your shareholders.”

Sanofi said rules in the state of Delaware, where Medivation is registered, gave shareholders owning a majority of the company the power to oust the board.

“If the Medivation board of directors continues to refuse to engage with us, then we intend to commence a process to remove and replace members of the board,” Brandicourt said.

 

In its quarterly earnings call on Wednesday, Medivation’s Chief Executive Officer David Hung said that Medivation’s major shareholders had been “very supportive” of the board’s choice to reject Sanofi’s bid.

He declined to comment on whether Medivation would run a sale process to explore offers from other potential bidders.

Sanofi went public with the takeover proposal on April 28, but Medivation rejected the $52.50-a-share deal outright, saying it undervalued the company “substantially.” The stock has since risen to over $59.

“We believe we have offered a fair price, and a very attractive premium,” Brandicourt wrote in the letter. “We remain enthusiastic about a potential combination with Medivation.”

Medivation’s first-quarter earnings missed most analysts’ forecasts. The San Francisco-based company reported non-GAAP net income of 11 cents per diluted share, up from 8 cents a year earlier, but much less than the average 23 cents expected by analysts in a Thomson Reuters poll.

Sanofi is keen to boost its presence in cancer treatments and teamed up last year with U.S firm Regeneron in immuno-oncology. This differs from traditional treatments such as chemotherapy or radiotherapy as it uses or enhances the patient’s own immune system to stop the growth of cancer cells.

Medivation, known for its Xtandi prostate cancer treatment, said on Thursday its board of directors “believes the execution of Medivation’s business plan will deliver value to its stockholders that is far superior to Sanofi’s proposal.”

The U.S. company will announce first-quarter results after the market closes on Thursday.

U.S drug maker Pfizer pfe has also approached Medivation to express interest in an acquisition, raising the possibility of a bid rivaling Sanofi’s, people familiar with the matter said on Tuesday.

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