Though they appear to be dissimilar and involved in quite diff erent industries, pharmaceutical companies are like oil companies—both industries must have new products in the pipeline. This is the reason an American fi rm, Genzyme Corporation, a Cambridge, Massachusetts, biotechnology company, and a French fi rm, Sanofi -Aventis SA, a pharmaceutical giant, began to dance with each other in 2010. It was a dance with fi nancial and staffi ng implications.
It was a long and important dance, with both parties interested in more than a one-night stand. Sanofi -
Avemtis was in trouble. Five of its eight best-selling drugs faced generic competition in 2012. To Chris Viehbacher, Sanofi -Aventis CEO, Genzyme looked like a solution to his problems. Genzyme had a portfolio of drugs to treat rare diseases, many of which were complex and diffi cult for generic rivals to mimic.
Henri Termeer’s company, Genzyme, had its problems, too. Manufacturing facilities were under scrutiny for production lapses that caused major shortages of key drugs. The resolution of its problems was being carefully monitored by U.S. regulators. These problems caused a drop of Genzyme’s stock price and turnover among its employees.
So Sanofi -Aventis offered to buy Genzyme, initially for $69/share. This offer in a private letter from Viehbacher to Termeer valued Genzyme at $18.4 billion. Termeer rebuff ed the offer stating, “The Genzyme board is not prepared to engage in merger negotiations with Sanofi based upon an opportunistic proposal with an unrealistic starting price that dramatically undervalues our company.”
Termeer indicated that the problem was the price. In fact, the directors were not opposed in principle to a sale of the company. They indicated that they wanted a fair value if they were to do a strategic transaction.
Sanofi countered with a “bear hug” letter. This was an open letter to Genzyme stockholders explaining the off er and its rationalization. The “bear hug” letter is one step removed from a “hostile takeover bid.”
Part of the reason for this “gentle” approach was that Viehbacher had his own board problems. Two of his largest shareholders, Total SA (French oil firm) and L’Oreal (French cosmetics firm), were determined that Sanofi not overpay. These companies had four of the 13 board seats.....

QUESTIONS
1. How do corporate struggles over ownership affect employees? Why?

2. What might be the advantages and disadvantages of changing corporate ownership?

3. If you were an employee in an organization that was a possible takeover target, what might you do to protect your personal future?