Sanofi aventis and Genzyme have finally agreed on a deal for Sanofi’s acquisition of the Cambridge, MA-based biotechnology company. The agreement values Genzyme at roughly $20.1 billion, or $74 per share, according to a joint statement by the companies. In addition to the cash payment, Genzyme shareholders will receive one contingent-value right for each share they own. The CVR means shareholders could receive additional cash payments based on the achievement of milestones related to the potential multiple sclerosis treatment Lemtrada (alemtuzumab MS) or the achievement of production volumes in 2011 for Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta). The companies expect the deal to close in the second quarter of 2011.
This long-awaited conclusion marks the end of months speculation by investors and media and back-and-forth between the companies. Taking a look back, in early July 2010 PharmTech blogger Patricia Van Arnum reported on rumors of sanofi looking to acquire a US-based company for the price of rougly $20 million. By the end of July, the buzz was that sanofi would be targeting Genzyme, and unconfirmed reports speculated that sanofi was close to making an unsolicited $18-billion bid, or $70 per share, as I mentioned in a blog post.
The rumors continued throughout August and posts by Stephanie Sutton and Erik Greb shared collected bits and pieces of details about the situation. Various sources and analysts had differing expectations for the deal, such as that Genzyme would take no less than $80 per share. By the end of the month, an official offer letter from sanofi to Genzyme had been announced with an offer of $69 per share. It was promptly rejected by Genzyme.
In October, sanofi made a tender offer of the same price and Genzyme advised shareholders to reject the offer. In November and December of last year, the company issued statements reiterating its position on the tender offer. When fewer than 1% of shares were tendered in early December, sanofi decided to extend the offer another six weeks to Jan. 21, 2011.
Both companies issued statements in early January, and sanofi said the possibility of CVRs and an offer was explored, as well as the potential of Lemtrada. Genzyme confirmed the discussions in a statement. As Stephanie Sutton wrote, the current opinion among analysts was that sanofi would pay $76 per share for Genzyme. When Genzyme announced that it was allowing sanofi to conduct due diligence on Jan. 31, many thought it was only a matter of time until a conclusion to the negotiations was formed and the deal considered a success. Now, after seven months, the companies have reached an agreement.
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