Sanofi agrees $20.1bn deal for Genzyme

Elizabeth Fournier
AFTER months of negotiations, French pharmaceutical company Sanofi has confirmed it will pay $20.1bn (£12.5bn) for Genzyme, the US biotech specialist it has been pursuing since last year.

The deal, confirmed yesterday, combines a $74 per share cash offer with extra delayed payments based on the performance of Genzyme’s experimental drug portfolio.

It marks the second-biggest biotech acquisition on record, after Genentech bought Roche in March 2009 for $46.7bn.

Traditional pharmaceutical companies have been increasingly investing in biotech firms, to broaden their portfolio as lucrative patents expire.

The agreed package includes an innovative contingent value right (CVR), which is tradable at a price determined by the future revenue from diabetes drug Lemtrada.

Analysts said that while in theory the CVR could add $3.8bn to the price, its market value is likely to be heavily discounted due to the uncertain outlook for the treatment and scepticism from investors towards the instrument.

“I think the CVR was an extremely important tool to bridge differences in value,” said Genzyme chief executive Chris Viehbacher.

Genzyme had previously rejected a $69 per share offer from Sanofi, which had valued the company at $18.5bn.

Once the acquisition is complete Genzyme president Henri Termeer, who has led the company since 1983, will step down.

Termeer had been reluctant to submit to any takeover advances, but a shortage of drugs combined with a manufacturing crisis saw the company shares slump 46 per cent between May and July of 2008.

Sanofi shares yesterday closed 3.51 per cent up on the previous day’s close, at €51.55.


23 May 2010 Sanofi chief executive Viehbacher approaches Genzyme president Termeer about a deal.

7 July 2010 Termeer tells Viehbacher he cannot commit to a meeting until after Genzyme's board meets on 9 July.

29 July 2010 Sanofi plans to send a written proposal, including a price per share. The subsequent letter outlined Sanofi's $69 per share offer.

29 August 2010 Sanofi publicises its offer for Genzyme, which Genzyme publicly rejects a day later.
20 September 2010 Termeer and Viehbacher meet. Termeer refuses to give guidance on a value for Genzyme and suggests Sanofi considers making contact again in 2011.

4 October 2010 Viehbacher takes Sanofi’s offer directly to Genzyme shareholders.

22 October 2010 Genzyme hosts an investor meeting to explain why it’s worth more than Sanofi’s offer.

26 November 2010 Termeer says he is open to a deal linking Genzyme’s value to the success of the Lemtrada drug by using a contingent value right (CVR).

31 January 2011 Genzyme says it allows Sanofi to conduct due diligence. Sources say the two have reached a basic agreement on deal terms pending the review.

16 February 2011
Sanofi announces it will buy Genzyme for $74 per share plus a CVR that could trade at $2-3 per share. The deal is worth roughly $20.1bn and should close early in the second quarter.