By Ben Hirschler and Leigh Thomas
LONDON/PARIS (Reuters) - French drugmaker Sanofi went public with a $9.3 billion offer to buy Medivation on Thursday, setting up what could be a lengthy takeover battle after the U.S. cancer firm rebuffed its approaches.
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 roughly 36 percent premium over Medivation's stock price one month prior to Thursday's offer.
It is, however, only modestly above Medivation's Wednesday closing price of $52.05 and investors signaled they expected Sanofi to dig deeper, with the shares trading above $56 on Thursday.
In 2015, the average offer price among life sciences deals was 40 percent above the target's stock price four weeks earlier, according to data from Thomson Reuters. Biotech deals saw even frothier premiums, typically around 50 percent.
Reuters reported last month that Medivation had been working with investment bank J.P. 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's 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.
Medivation, which has limited takeover defenses, said it would respond to Sanofi's offer following a board meeting on Thursday, with input from financial advisers Evercore and J.P. Morgan.
Sanofi, which is being advised by Morgan Stanley, has a track record of pushing through unsolicited deals, after buying Genzyme for $20 billion in 2011.
Sanofi's move comes on the same day that Abbott Laboratories agreed to buy medical device maker St. Jude Medical for $25 billion and AbbVie announced a $5.8 billion deal for cancer firm Stemcentrx, highlighting a pattern of healthcare companies snapping up smaller rivals.
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The French company, whose shares slipped 1 percent, 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.