Genzyme-Sanofi Deal Might Be Close, Report Says

2/1/11

French drug giant Sanofi-Aventis’s long-sought takeover of Cambridge, MA-based biotech company Genzyme (NASDAQ:GENZ) might happen within the next week or so, sources told The New York Times yesterday. The report came the same day that Genzyme announced that it had opened its books to Sanofi to allow its potential buyer to conduct due diligence.

Sanofi—which made its desire to buy Genzyme for $18.5 billion or $69 per share public back in August—has agreed to raise its acquisition offer by an unspecified amount, The Boston Globe reported today. Now the two sides are said to be at the table working out the details of the deal, which would put the Bay State’s largest biotechnology outfit in the hands of the Paris-based drugmaker.

Genzyme’s stock closed at $73.35 on Monday, giving the company a market cap of $19 billion, according to Google Finance. The closing price was just shy of its 52-week high of $73.46 per share.

A key aspect of closing the deal appears to hinge on the two companies coming to terms on the value of Genzyme’s experimental multiple sclerosis treatment, alemtuzumab. While Genzyme sees the drug, which is already approved as a treatment for leukemia, as a potential $3.5 billion seller, Sanofi expects the drug to reach only about $700 million in annual sales, according to The Times report.

The Globe reports that the buyout deal will likely include terms that would provide additional payments to Genzyme shareholders if alemtuzumab hits certain financial targets. This term would obviously be a big compromise for Genzyme, and the company’s long-time chairman and CEO, Henri Termeer, is known for getting his way in negotiations.

Termeer has insisted for months that Sanofi’s offer undervalued Genzyme, a global leader in treatments for rare genetic diseases, and its potential multiple sclerosis drug. We’ll see whether the companies can strike a deal in the next week or so.

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