BioWorld International Correspondent

PARIS - Genset SA is in discussions with another company that could make an offer for all of its outstanding stock - ordinary shares, convertible bonds and American depositary shares (ADSs).

The Paris-based genomics company made the announcement Friday, two days after asking for trading in its stock to be suspended on both sides of the Atlantic. That move followed two days during which its share price on the Euronext market in Paris jumped by 60 percent. Genset asked the Paris stock exchange to suspend the listing of its ordinary shares and convertible bonds, and made a similar request to the Nasdaq regarding its ADSs.

In a statement, the company disclosed that it was "engaged in preliminary discussions concerning a possible major strategic transaction," explaining that a third party was proposing to make a cash offer for all its stock. But the "potential acquirer" imposed a specific condition: It "informed the company that no offer will be made unless the shareholders of Genset vote to eliminate the 20 percent cap on voting rights presently contained in Article 19.5 of the company's statutes at the general meeting of the shareholders," being held today.

Article 19.5 in effect limits the voting rights of any shareholder to a maximum of 20 percent regardless of how many shares he owns. The article was adopted specifically to discourage takeover bids. Genset had expected to learn the specific terms of the offer by late Tuesday, and trading in its stock will remain suspended until "at least the completion of the shareholders' meeting."

BioWorld International learned that shareholders will be asked to make a decision only on the scrapping of Article 19.5, not on any offer that may have been formulated at that point. If a bid is made, Genset's board of directors would meet later in the week to discuss it.

This development comes only a few weeks after Marc Vasseur replaced André Pernet as chairman and CEO of Genset, raising the question of whether he was aware of the third party's interest in acquiring Genset at the time he returned to the company he had left less than two years earlier, and whether he is assured of a future with Genset if the takeover does go ahead. (See BioWorld International, May 22, 2002.)

Vasseur told BioWorld International at the time of his appointment that Genset had an "extremely devalued public image" and that he wanted to correct the perception that it is a one-drug company, referring to its anti-obesity drug Famoxin, clinical trials of which are due to start in October. Vasseur stressed that there was a "huge number of drug candidates in our collection of secreted proteins," but said the company needed to find partners to exploit them, adding that he would be very active in looking for such collaborations.

Meanwhile, the U.S. Patent and Trademark Office allowed Genset to file a patent application covering the fluorescent probes it uses in multicolor fluorescent in situ hybridization methods, and principally in chromosomal painting. The company said those techniques facilitate the discovery and analysis of complex genetic rearrangements in human cellular proliferations and that chromosomal painting is essential for studying solid tumors and accurately defining highly complex chromosomal abnormalities responsible for cancer development. Vasseur said Genset is prepared to license out its FISH technology to third parties that are able to use it for diagnosing chromosomal rearrangements.

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