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A new multibillion-pound deal is brewing in the pharma industry

People view Damien Hirst's collection of artworks and original designs at the Sotheby's sale preview of contents from the Pharmacy restaurant on October 14, 2004 in London, England. The Notting Hill restaurant was designed by Damien Hirst and was one of the most successful during London's vibrant restaurant scene from 1998 to 2003. Over 140 lots of Hirst's designs will be offered at auction on October 18 and are expected to fetch in excess of GBP3 million. (Photo by )

Scott Barbour/Getty Images

The French pharmaceuticals giant Sanofi has made a near-$10-billion (£6.85 billion) bid for the American biotech firm Medivation, which specialises in cancer treatments.

In a letter sent to Medivation on Thursday, Sanofi's chief executive, Olivier Brandicourt, offered to buy the San Francisco-based company for $52.50 (£35.96) a share, a deal that would value it at $9.3 billion (£6.4 billion).

The move comes just a few days after Medivation's president and CEO, David Hung, told Sanofi he did not want to sell.

Sanofi said its offer represented "a compelling strategic and financial opportunity to drive significant value for the respective companies' shareholders, employees, patients and caregivers." Brandicourt added that the price being offered represented "a premium of over 50% to Medivation's two-month volume weighted average price (VWAP) prior to there being takeover rumors."

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Here's an extract from Sanofi's letter to Medivation:

Dear David,

It has been over a month since we first talked and I expressed my view that a combination would make strong strategic sense, and I said we were prepared to make a very attractive proposal. During our first call on March 25, you said that you were unwilling to meet, and in our subsequent conversation on April 3 you said that, after a review with your Board, there was no interest in discussing a transaction. Given your unwillingness to meet or to hear our proposal, we sent you a letter on Friday, April 15, setting forth a proposal (the "Proposal") to acquire Medivation for $52.50 per share in cash, representing a premium of over 50% to the two-month volume weighted average trading price (VWAP) prior to there being takeover rumors. We have not heard anything from you for almost two weeks, other than an acknowledgment of receipt of our letter.

We do not understand the delay in responding to our letter. The price we put forth represents a very substantial premium, and it would be all cash without any financing condition. In these circumstances we believe it is appropriate to make this letter public, which we are doing today.

You can read the letter in its entirety here.

Investors in Sanofi haven't exactly reacted positively to the bid, with shares slipping more than 1.3% in trading on Thursday morning. Here's how that looks:

sanofi april 28
sanofi april 28

Scott Barbour/Getty ImagesIf completed, the deal would be the first major pharmaceuticals merger since the collapse of Allergan and Pfizer's deal earlier this month. The $160 billion deal fell through at the start of April because of changes in tax law that reduced the viability of the merger.

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