By Nina Sovich and Noelle Mennella Reuters
PARIS | Wed Feb 16, 2011 6:02am EST
PARIS (Reuters) - French drugmaker Sanofi-Aventis SA agreed to buy Genzyme Corp with a sweetened $20.1 billion cash offer, plus payments tied to the success of the U.S. biotech group's drugs, the companies said on Wednesday.
The acquisition - which comes nine months after Sanofi CEO Chris Viehbacher first put the idea to Genzyme's Henri Termeer - will boost Sanofi's earnings because it will give the French company a new platform in rare diseases.
Sanofi will pay $74 a share in cash and offer a tradable contingent
value right, or CVR, whose value will depend on Genzyme's experimental multiple sclerosis drug Lemtrada and production of two other medicines.The deal's announcement marks the second-biggest in biotech history and will help Sanofi offset declining revenue from drugs that have lost, or will lose, patent protection.
The deal will close early in the second quarter and will lift Sanofi's earnings by between 0.75 and 1.0 euro per share by 2013.
Shares in Sanofi rose 3.3 percent by 1035 GMT as investors welcomed the boost to earnings. Vincent Meunier, an analyst at Exane BNP Paribas, said the forecast of 12 to 16 percent uplift to 2013 earnings was above his expectation of 10 percent.
The first $1 related to the CVR will 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 to Lemtrada and will kick in if that drug wins approval in multiple sclerosis and exceeds various sales milestones, which run up to $2.8 billion.
"I think the CVR was an extremely important tool to bridge differences in value," Sanofi CEO Chris Viehbacher said.
His decision to buy Genzyme follows AstraZeneca's acquisition of MedImmmune in 2007, Eli Lilly buying Imclone in 2008 and Roche's record buy of the rest of Genentech in 2009.
Photo Credit: Reuters/Brian Snyder
adapted from Reuters
