Suitor extends Genzyme review; deal may be near

By Robert Weisman
Globe Staff / February 7, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

The French drug giant Sanofi-Aventis SA extended its review of Genzyme Corp.’s financial books and facilities over the weekend, delaying an acquisition that was thought to be imminent.

The parties have agreed on a general framework under which Cambridge-based Genzyme, the largest biotechnology company in Massachusetts, would be sold for about $20 billion in a mix of cash and milestone payments, said people who have been briefed on their negotiations.

But the deal depends on Sanofi’s completion of its “due diligence’’ reviews, which began only last month. And the terms could still change before the companies’ boards vote on whether to approve a deal, the people familiar with the talks said. They asked not to be identified because the discussions are intended to be private.

The board votes had been scheduled for this past weekend, they said, but were postponed to give Paris-based Sanofi more time to conduct its review.

In particular, the suitor is said to want assurances that Genzyme is far along in its recovery from a series of manufacturing problems that have dogged the company over the past two years.

A virus found in a bioreactor at the Allston Landing plant forced a temporary shutdown in summer 2009, along with the rationing of two drugs to treat rare genetic disorders.

Sanofi also wants to make sure that Genzyme’s new production plant in Framingham, which would give it backup capacity to make its best-selling enzyme-replacement drugs, is on track to win Food and Drug Administration approval to open this year.

That would give Genzyme a competitive edge against its Irish rival, Shire PLC, which is producing competing drugs.

Under the general agreement on financial terms, the sources said, Sanofi has agreed to boost its cash offer for Genzyme to $74 per share, from $69.

In addition to that upfront payment, Sanofi would issue Genzyme shareholders a tradeable security, called a contingent value right, with an initial value of $3 per share. That value could rise if Genzyme’s experimental drug to treat multiple sclerosis, called Lemtrada, is approved by the FDA and meets certain sales targets later in the decade.

Sanofi, the world’s fourth-largest drug maker, has been pursuing Genzyme since May. The companies have been bargaining on and off for the past six months, initially through financial advisers and more recently through top-ranking executives.

Robert Weisman can be reached at