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Sanofi to buy Genzyme for $20.1 billion

Sanofi to buy Genzyme for $20.1 billion
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First Published: Wed, Feb 16 2011. 12 43 PM IST
Updated: Wed, Feb 16 2011. 12 43 PM IST
Paris: French drugmaker Sanofi-Aventis SA agreed to buy Genzyme Corp for $20.1 billion in cash, plus payments tied to the success of the US biotech group’s drugs, the companies said on Wednesday.
The acquisition comes nine months after Sanofi chief executive Chris Viehbacher first put the idea to Genzyme CEO Henri Termeer. It is expected to boost Sanofi’s earnings per share from the first year following completion.
Sanofi will pay $74 a share in cash and a contingent value right (CVR) for Genzyme.
The CVR is a tradable right to additional payments if Genzyme’s multiple sclerosis drug, Lemtrada, reaches regulatory and sales targets or 2011 production volumes of Cerezyme and Fabrazyme are achieved.
The deal, announced in a statement which confirmed what sources with knowledge of the talks had told Reuters on Tuesday, is the second-biggest in biotech history and gives Sanofi a foothold in the market to treat rare diseases.
It will help Sanofi compensate for declining revenue from drugs that have lost, or are set to lose, patent protection.
Sanofi also predicted the deal, which is expected to close early in the second quarter, would lift its underlying, or “business”, earnings by between €0.75 and €1.0 per share by 2013.
The CVR runs until the end of 2020 and entitles holders to a series of payments worth up to $14 in total, depending mainly on the success of Lemtrada.
The first $1will be paid out if specified production levels are met in 2011 for Cerezyme and Fabrazyme -- two drugs for Gaucher and Fabry disease.
The bulk of the potential payments, however, are linked Lemtrada and will kick in if the drug wins approval in multiple sclerosis and exceeds various sales milestones, which run up to $2.8 billion.
Viehbacher said the CVR structure served as an important “value bridge” and would reward both Genzyme and Sanofi shareholders, particularly if Lemtrada outperforms market expectations.
Genzyme will become Sanofi’s global specialist in rare diseases and will maintain a sizeable presence in Boston, where it is based, the companies said in a joint statement.
Credit Suisse and Goldman Sachs are advising Genzyme. Evercore Partners and JPMorgan are Sanofi’s lead advisers.
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First Published: Wed, Feb 16 2011. 12 43 PM IST
More Topics: Sanofi | Genzyme | Drugmaker | Acquisition | CVR |