Tuesday, February 01, 2011

Sanofi Talks Said to Value Genzyme at $20 Billion With Drug Fee


Sanofi-Aventis SA’s talks with Genzyme Corp. may value the biotechnology company at about $76 to $77 a share, or about $20 billion, including payments tied to sales of an experimental multiple sclerosis drug, three people with knowledge of the discussions said.
Sanofi, based in Paris, may increase its initial $69-a- share offer by about $2 in cash, said one person, who declined to be named because talks are private. The final deal may also include so-called contingent value right payments likely to be worth about $5 to $6 a share, depending on revenue from the MS drug Lemtrada, said two of the people.
A deal may happen within a week, the people said. Negotiations are ongoing and final terms may change. The companies said Jan. 31 they started due diligence. That review will focus on Genzyme’s manufacturing after a plant contamination, three people said.
Contingent value rights for Lemtrada may initially be set at as much as $6 a share, though they may ultimately pay out more than that if the medicine exceeds sales targets, one person said. If Genzyme fails to win regulatory clearance to sell the drug for MS, they would pay out nothing, the person said. Investors would be able to trade the CVR, two people said.
Bo Piela, a spokesman for Genzyme, based in Cambridge, Massachusetts, declined to comment. Sanofi spokesman Jean-Marc Podvin also declined to comment.

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