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Zentiva N.V. – Sanofi Offer Update

Board Continues To Advise Shareholders To Reject The Sanofi Offer As It Fails To Reflect Zentiva’s Fundamental Value

PRAGUE, LONDON, September 3, 2008 – Zentiva N.V. (“Zentiva” or the “Company”) announces that its Board has provided an update on the unsolicited voluntary takeover offer published by Sanofi-Aventis Europe, a wholly owned subsidiary of sanofi-aventis, on July 11, 2008 at a price of CZK 1,050 per share (the “Sanofi Offer”).

The Sanofi Offer was the main item of discussion at the planned Extraordinary General Meeting held in Amsterdam today.

The Sanofi Offer

In a statement made today Mr. Jiri Michal, Chairman of the Board and CEO of Zentiva, reiterated, on behalf of the Board, its view that the Sanofi Offer is not in the best interests of Zentiva, its shareholders and all of its other stakeholders:

“The Sanofi Offer fails to reflect the unique strategic position that we have built in the CEE generics space over the last three years. It also fails to capture the significant improvement in operational and financial performance or the growth prospects which were reflected in our strong H108 results. Furthermore, by accepting this offer shareholders could miss out on participating in the benefits of a potential synergistic transaction or from receiving a premium in a potential change of control transaction. The Board therefore strongly recommends that shareholders do not accept the Sanofi Offer and I Iook forward to meeting with more of Zentiva’s shareholders over the next several days to explain to them face to face our exciting future as an independent business.”

The Zentiva Board continues to recommend that shareholders reject the Sanofi Offer.

The Board of Zentiva has given due and careful consideration to the strategic, financial and social aspects and consequences of the Sanofi Offer and has arrived at its view based on extensive legal and financial advice with respect to the Sanofi Offer, including an opinion on the Sanofi Offer from Merrill Lynch International (“Merrill Lynch”).

Key factors which have led to the Board’s recommendation that Zentiva’s shareholders continue to reject the Sanofi Offer are:

  • Zentiva today has a unique CEE platform with strong growth prospects and a focus on driving efficiencies
  • Zentiva has a clear strategy for the future and strong confidence in 2008 and beyond, supported by execution track record
  • The Sanofi Offer is inferior compared to precedent bid premia and at the lower end of comparable transaction multiples

The Board believes that Zentiva’s value proposition is significantly above the Sanofi Offer of CZK 1,050 per share and that the following key strengths of the Company provide a strong platform for Zentiva to develop as a highly successful independent business:

  • The best CEE generics platform means that the Company is well positioned to capitalise on the region’s high growth and fragmented markets including Turkey
  • No. 1 market positions in the Czech Republic and Slovakia and market leading positions in Turkey, Romania, Russia, Poland and Ukraine – giving the Company access to a total target population of approximately 440 million
  • One of the largest pharmaceutical producers by volume in Eastern Europe generating significant economies of scale
  • Diverse product portfolio with a deep, vertically integrated pipeline of branded generics which are designed to meet the regions growing need for affordable medicine
  • Strong cashflow generation providing flexibility for future growth and investment
  • Strong and experienced senior and local management

Zentiva’s management has taken decisive actions over the last twelve months to improve the Company’s margins and overall returns. These include the re-positioning of the Company’s Romanian business, improving the overall efficiency of its sales and marketing organization, as well as its progress in integrating and improving the profitability of the Company’s recently acquired (July 2007) business in Turkey.

These actions have already started to have a positive impact on Zentiva’s business as evidenced by the positive first half year 2008 results that were announced on August 4, 2008. In the first half of 2008 Zentiva’s sales increased by 42% (excluding adverse currency effects) and EBIT increased by 40.1% (excluding an impairment charge).

The progress that has been made during the course of 2008 means that the Company is  well placed to achieve its full year targets of around 20% sales growth and above 15% EBIT margin and is in a strong position to deliver further sales growth and enhanced margins in 2009.

Zentiva’s strong regional footprint allied to its improving profitability means that it has the potential to benefit from the on-going consolidation in the generics space and in the CEE/CIS regions in particular. The Company’s ability to play an active role in this major industry trend has the potential to generate further significant value for Zentiva’s shareholders.

Mr. Ji?í Michal, Chairman of the Board and CEO of Zentiva
commenting on the Sanofi Offer said:

“The Board has taken great care to evaluate the offer made by Sanofi-Aventis Europe as it is committed to maximizing value for all of the Company’s shareholders. However as we have outlined today the Board believes that this offer falls a long way short of reflecting Zentiva’s fundamental value. The offer price fails to recognise the value of Zentiva’s unique regional business platform, our improving financial performance and the future returns that we can deliver as an independent business. It also does not take into account the potential value that could be generated for our shareholders from our active participation in the consolidation of the generics industry that is taking place both globally and regionally. The Board therefore strongly recommends that shareholders do not accept the Sanofi Offer.”

A more detailed overview of the Board’s assessment of the Sanofi Offer, including a financial and commercial assessment and other considerations of the Board, is available in the full position statement that has been in accordance with Articles 18(2) and 18(3) of the Dutch Public Offers Decree (Besluit openbare biedingen Wft). The full position statement can also be downloaded from Zentiva’s website (go to “Investor Relations”), and can be obtained free-of-charge by contacting Zentiva via email at or by telephone at +420 267 243 888.

Investor Relations  

Petr Šulc
Chief Financial Officer
Tel: +420 267 242 737

Alexander Mar?ek

Corporate Finance Director
Tel: +420 267 243 745

Lib?na Stiebitzová

Investor Relations Specialist
Tel: +420 267 243 055

General Inquiries
Tel: +420 267 243 888
Fax: +420 272 702 869


Media Relations

V?ra Kudynová
PR Manager
Tel: +420 267 242 312

Citigate Dewe Rogerson

Tel: +44 (0)20 7638 9571
David Dible
Chris Gardner




Merrill Lynch was engaged by the Company to act as its financial advisor with respect to the Sanofi Offer. Merrill Lynch is acting exclusively for Zentiva in relation to the Sanofi Offer and for no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to Sanofi Offer.

Forward-looking Statements

This document contains “forward-looking statements”. These forward-looking statements include all statements that are not historically known facts. They appear in a number of places throughout this document and include, but are not limited to, statements and underlying assumptions regarding Zentiva’s intentions, beliefs, projections, plans, objectives, estimates, and current expectations concerning, amongst other things, Zentiva’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies, and the countries and industries in which Zentiva operates. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans" and similar expressions.  By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, many of which are difficult to predict and generally beyond the control of Zentiva. Forward-looking statements are not guarantees of future performance, and the actual results of Zentiva’s operations, financial condition, liquidity, performance, prospects, growth, strategies, and the development of the countries and the industries in which Zentiva operates may differ materially from those described in, or suggested by, the forward-looking statements contained in this document.  Other than as required by applicable law, Zentiva does not undertake any obligation to update or revise any forward-looking information or statements.

Other Important Notices

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or global depositary shares in Zentiva, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.

Recipients of this document, or any part or any copy of it, may not, directly or indirectly, take, or transmit into, or further distribute the document in, the United States, Canada, Australia, or Japan, or to any resident thereof. The distribution of this document in other jurisdictions may also be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of US, Canadian, Japanese, Australian or other securities laws.

Zentiva’s ordinary shares and global depositary shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the US except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

For the purpose of Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom (the “FSMA”), any potential invitation or inducement to engage in any investment activity included within this document (which Zentiva believes there is none) is directed only at (i) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) of the United Kingdom (the “Financial Promotion Order”); (ii) persons who fall within Articles 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order; and (iii) any other persons to whom this document for the purposes of Section 21 of FSMA can otherwise lawfully be made (all such persons together being referred to as “relevant persons”), and must not be acted on or relied upon by persons other than relevant persons.  Any potential invitation or inducement to engage in any investment activity included within this document (which Zentiva believes there is none) is available only to relevant persons and will be engaged in only with relevant persons.

This document is published in both English and Czech version, however, only its English version should be considered the official one. Its Czech version is published solely for information purposes, and no representation is made and no warranty is given as to the accuracy of the Czech translation. Should there be any difference between the English and Czech version of this document, the English version shall always prevail.


Zentiva N.V. is an international pharmaceutical company focused on developing, manufacturing and marketing modern generic pharmaceutical products. The Company has leading positions in the pharmaceutical markets in the Czech Republic, Slovakia, Romania, and Turkey and is growing rapidly in Poland, Russia, Bulgaria, Hungary, the Ukraine and the Baltic States. Zentiva’s strategy is to further this growth by increasing patient access to modern medicines through primary care providers within the EU and Eastern Europe. This growth will be based on further organic development of Zentiva’s existing business and through selective acquisitions, whilst maintaining profitable growth.

The Company addresses a wide range of therapeutic areas but has a particular focus on cardiovascular disorders, inflammatory conditions, pain, infections and diseases of the central nervous system and the gastrointestinal and urology fields.

The Zentiva Group employs over 6,000 people and has production sites in the Czech Republic, Slovakia, Romania, and Turkey.

Zentiva is listed on the Prague and London Stock Exchanges. Based on official notifications by shareholders to the Dutch regulator, the Company’s largest shareholders are Sanofi-Aventis (24.9%), PPF Group and Generali PPF Holding B.V. acting in concert (19.2%) and Fervent Holdings Limited (7.6%). Zentiva’s management holds 5.9% of the Company shares. Other institutional and private investors hold a combined 42.4% of Company shares.

Posted: September 2008