Supplier News Breaks Archives
Sanofi inks deal to acquire Genzyme for $20.1 billion
February 16th, 2011
PARIS and CAMBRIDGE, Mass. – Ending months of haggling, sanofi-aventis has entered an agreement to buy biotech firm Genzyme Corp. for $20.1 billion in cash.
The companies said Wednesday that under the acquisition deal, sanofi will acquire Genzyme for $74 per share. That represents a premium from the Paris-based pharmaceutical giant's initial, unsolicited offer of $69 per share, or about $18.5 billion, in late July. Genzyme's shares were trading in the low 50s before news surfaced of a potential acquisition by sanofi.
Also under the agreement, each Genzyme shareholder will receive one contingent value right (CVR) for each share they own, entitling the holder to additional cash payments if specified milestones related to the company's drug Lemtrada (alemtuzumab MS) are achieved over time. Lemtrada, an experimental drug for multiple sclerosis, is sold under the name Campath as a treatment for blood cancer. With the CVR, Genzyme shareholders also are entitled to cash payments if a milestone is achieved related to 2011 production volumes for Cerezyme and Fabrazyme, which treat Gaucher disease and Fabry disease, respectively.
Sanofi and Genzyme said the boards of both companies have unanimously approved the transaction, and the companies expect the deal to close early in the second quarter. They reported that the acquisition has already received antitrust clearance from the European Commission and the U.S. Federal Trade Commission.
"This agreement with Genzyme is both consistent with our long-term strategy and creates significant long-term value for our shareholders," Christopher Viehbacher, chief executive officer of sanofi-aventis, said in a statement. "This transaction will create a meaningful new growth platform for sanofi-aventis while expanding our footprint in biotechnology. We expect it to be accretive from year one, and the CVR structure, which served as an important value bridge between our two companies, rewards both Genzyme and sanofi-aventis shareholders, particularly if Lemtrada outperforms the market's current expectations."
Genzyme chairman and CEO Henri Termeer commented that the sale to sanofi "represents a new beginning for Genzyme." The biotech company will retain its corporate brand under the deal.
"Genzyme has a record of innovation and a unique and pioneering approach to serving patients. We also share an exciting vision of the future, one in which Genzyme and sanofi-aventis grow and innovate by developing breakthrough treatments that change the lives of people with serious diseases," Termeer stated. " Sanofi-aventis believes in what we do, in our people and in our potential. We look forward to building a sustainable future together."
According to the companies, Genzyme will become a key new platform in sanofi-aventis' sustainable growth strategy and expand sanofi's presence in biotechnology. Sanofi-aventis said it aims to make Genzyme its global center for excellence in rare diseases and that the acquisition will reinforce sanofi's commitment to the greater Boston area, where it already has a sizable presence.
In addition, sanofi noted, Genzyme has built strong renal-endocrinology, hematology-oncology and biosurgery businesses that are complementary to existing sanofi businesses and include highly differentiated, market-leading products that provide significant benefits to patients. Sanofi said it will work with Genzyme through the integration process to develop plans to enhance the opportunities for these businesses going forward.
Genzyme and sanofi-aventis said they will immediately begin integration planning, including the formation of a joint integration steering committee. Plans call for Termeer will resign as chairman, president and CEO of Genzyme after the transaction is finalized but will advise on the integration in his role as co-chairman of the integration committee with Viehbacher.
Sanofi made its original unsolicited offer to buy Genzyme for $69 a share in a July 29 letter by Viehbacher, and in August Genzyme publicly confirmed that it received the proposal and that its board rejected the offer as undervalued.
Then in October, Sanofi made a hostile bid to acquire Genzyme for $69 a share, which Genzyme urged its shareholders to reject and the company's board spurned shortly thereafter. Genzyme in November responded to another letter from Viehbacher, saying sanofi's bid remained too low, and then in December reiterated its board's recommendation to reject the $69-per-share tender offer, which was extended. Talks rekindled in January, and later that month Genzyme announced that it would allow sanofi to conduct due diligence for a possible acquisition agreement.