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Bioenvision Shareholder Says Bid 'Ill-Timed'

SCO Capital is 'dissatisfied' by Genzyme's $5.60-a-share offer.

A large



shareholder raised concerns Wednesday over



$245 million bid for the biotech company.

The $5.60-a-share cash offer,

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announced Tuesday, represents a 50% premium to the average price of the stock's last 20 days of trading. But SCO Capital's chairman, Steven Rouhandeh, thinks it's odd that buyout negotiations would be taking place in this time frame when Bioenvision shares just traded off their 52-week low.

SCO Capital, which owns 7.2 million shares, or 13.4%, of Bioenvision, is dissatisfied because of the potential it sees in the company's pipeline. Specifically, "Given that the company just completed a dilutive financing in order to finance the completion of additional clinical trials for Evoltra, this deal seems particularly ill-timed," Rouhandeh said in a letter to Bioenvision's board of directors.

Similarly, analysts at Rodman & Renshaw said in a report Wednesday that they believe "the transaction price does not reflect a fair value for the company." However, they aren't optimistic there will be an improved offer.

"While we would love to speculate on the potential of another suitor to place a competing bid for the company, or the potential for shareholders to reject Genzyme's low-ball offer, at the end of the day, we believe the majority of shareholders will likely vote in favor of the deal," they said in the report.

Genzyme needs just more than 50% of shareholders to agree to tender their shares for the transaction to proceed. According to the Rodman & Renshaw analysts, executive officers, directors and shareholders of Bioenvision, who make up about 20% of the outstanding shares, have already entered into agreements supporting the transaction.

Analysts expect the cash tender offer could conclude by July 2007.

Since the announcement of the deal Tuesday, Bioenvision has been the subject of several analyst downgrades. Friedman Billings lowered its rating from outperform to market perform, UBS revised its rating from buy to neutral, Rodman & Renshaw downgraded it from market outperform to market perform and AG Edwards lowered its rating from buy to hold.

Bioenvision closed Wednesday up 28 cents, or 5%, at $5.88, but fell 10 cents, or 1.7%, to $5.78 in recent after-hours trading. Genzyme shares closed the regular session up 65 cents, or 1%, at $63.21 but were down 1.11% at $62.51 in recent after-hours trading.