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Drug Giant Sanofi Seals $20b Deal To Acquire Genzyme
Greg Keller | February 16, 2011

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Paris. French drug maker Sanofi-Aventis has agreed to buy Genzyme in a sweetened all-cash deal that values the US biotechnology company at $20.1 billion, ending months of corporate haggling.

Sanofi-Aventis said on Wednesday that it had also agreed to make additional cash payments to Genzyme shareholders contingent on the success of several of the Cambridge, Massachusetts-based company’s drugs.

The announcement comes after nearly nine months of back-and-forth between the two companies, with Sanofi-Aventis finally deciding Genzyme’s portfolio of rare disease treatments was worth stumping up an extra $5 a share to its original $69 per share offer.

The boards of both companies unanimously approved the deal, which is expected to close early in the second quarter, Sanofi-Aventis said in a statement.

Sanofi-Aventis chief executive Chris Viehbacher launched a hostile takeover bid on Genzyme last October, only to meet stiff resistance from Genzyme’s founder and CEO Henri Termeer. The two sides have since softened their positions, with Genzyme opening its books to share confidential data with Sanofi-Aventis earlier this month, signaling a deal was near.

The agreement “will create a meaningful new growth platform for Sanofi-Aventis while expanding our footprint in biotechnology,” Viehbacher said in a statement.

Genzyme would give Sanofi a new platform for growing its biotech business, let it expand into the growing — and lucrative — market for drugs for rare diseases, increase its US presence and give it more experimental drugs in mid- and late-stage testing. Those include three for high cholesterol, a huge global market. And Genzyme has said it is close to resolving manufacturing problems that have limited sales of two key drugs for genetic disorders.

Genzyme’s drugs for rare genetic disorders are in a hot niche for big pharmaceutical companies trying to diversify beyond blockbuster pills that get slammed by cheaper generic rivals after a decade or so. Genzyme’s best-seller Cerezyme treats Gaucher disease, an enzyme disorder that can result in liver and neurological problems. Its No.2 medication, Fabrazyme, treats an inherited disorder known as Fabry disease, which is caused by the buildup of a particular type of fat in the body’s cells.

The deal gives Genzyme shareholders one “contingent value right” for each share owned. These CVRs give holders the right to cash payments based on Genzyme meeting certain goals, including raising production levels for Cerezyme and Fabrazyme, getting final FDA approval for multiple sclerosis treatment Lemtrada, and higher sales targets.

Associated Press