The decision to target Medivation marks a return to the biotech
takeover trail for Sanofi, which is looking to new cancer treatments
to bolster its portfolio and help offset declining sales of mainstay
diabetes drug Lantus.
Sanofi's non-binding proposal is to buy Medivation for $52.50 per
share in cash, representing a 50 percent premium over the San
Francisco-based firm's two-month volume-weighted average share price
prior to takeover rumors.
It is, however, only modestly above Medivation's Wednesday closing
price of $52.05, reflecting a run-up in the stock in recent weeks on
bid talk.
Reuters reported last month that Medivation had been working with
investment bank JP Morgan to handle interest from companies
regarding a potential acquisition, but it had no plans to sell
itself.
Bryan Garnier analyst Eric Le Berrigaud said Sanofi could now face a
prolonged takeover fight with other players potentially getting
involved, including Japan-based Astellas Pharma, Medivation's
partner on its prostate cancer drug Xtandi.

Britain's AstraZeneca has also been reported to have looked at
Medivation.
Officials at Astellas and AstraZeneca declined to comment, although
one person close to the British company said it was unlikely to
enter a bidding war.
LOOKING FOR DEALS
The French company, whose shares slipped 2 percent in a sharply
weaker European market by mid-morning, said there was no certainty
the deal would get done, but that if it did, it would boost earnings
immediately.
Deutsche Bank analysts said Sanofi likely had "significant
flexibility" to raise its offer, given the current low cost of debt,
while Bernstein calculated the deal would still lift earnings from
2017 even at $62.40 a share, or 20 percent above Wednesday's close.
The premium to the unaffected price offered by Sanofi is below some
other recent large biotech deals, with Roche paying a 63 percent
premium for Intermune in 2014 and Alexion 140 percent for Synageva
last year.
Stepping up acquisitions fits with the strategy of Sanofi Chief
Executive Olivier Brandicourt, who took over a year ago. He told
Reuters in January that he was looking for deals to broaden its
reach in areas such as oncology and could consider deals of up to
$20 billion.
France's biggest drugmaker is going through a tough patch, due to
falling sales of Lantus, prompting it to warn of no meaningful
profit growth over the next two years.

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Oncology is currently the hottest area of pharmaceutical research,
thanks to advances in understanding the biological drivers of the
disease. Sanofi has a long history in selling chemotherapy drugs but
has been less successful at developing modern cancer medicines.
'COMPELLING' PROPOSAL
Brandicourt first contacted Medivation about a deal on March 25 but
he said Chief Executive Officer David Hung had declined to meet him
and had told him the U.S. company's board was not interested in
discussing a transaction.
Sanofi then set out its $52.50-a-share offer in an April 15 letter
to Hung, to which Medivation only acknowledged receipt without
commenting on its contents.
"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," Brandicourt wrote in a follow-up
letter to Hung on April 28.
"We also strongly believe that Medivation shareholders would find
our proposal to be compelling."
Medivation officials were not immediately available for comment.

Xtandi, which had worldwide sales of nearly $2 billion in 2015, is
Medivation's only marketed drug. The high price of Xtandi has been
criticized by some U.S. lawmakers, including Democratic Party
presidential hopeful Bernie Sanders.
Medivation is also conducting clinical trials on two experimental
drugs, talazoparib for breast cancer and pidilizumab for blood
cancers.
The global pharmaceutical industry has seen a flurry of deal-making
in the past two years, as large companies try to focus on a smaller
number of businesses where they can establish a leading position,
often by snapping up young biotech firms.
(Editing by Jason Neely and Keith Weir)
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