S-A to buy Genzyme for $20.1bn

French pharma firm sanofi-aventis (S-A) is to acquire US-based biotech Genzyme for $20.1bn, as well as possible future payments, following nine months of discussions.

The deal, which has been unanimously approved by both companies' boards of directors, calls for S-A to pay $74 a share in cash plus a contingent value right (CVR) that could result in additional payments worth up to $14 per share tied to regulatory and sales milestones for Genzyme's multiple sclerosis drug Lemtrada (alemtuzumab) as well as milestones related to production of the Gaucher and Fabry disease drugs Cerezyme (imiglucerase) and Fabrazyme (agalsidase beta). Recent manufacturing problems have caused shortages of the drugs, which are usually profit drivers for the company.

The CVR structure had been acknowledged as a particular sticking point during the companies' protracted negotiations.

After the acquisition, Genzyme will become S-A's global centre for excellence in rare diseases. The deal is expected to close in the second quarter and will help S-A compensate for the effects of generic competition on some of its key drugs.

S-A had previously made a tender offer to acquire the US biotech company for $18.5bn or $69 a share in an all-cash deal. That price, which Genzyme's board said significantly undervalued the company, represented a 31 per cent premium over the one-month historical average share price through July 22, the day before the media began reporting that S-A was looking to buy Genzyme.

History of the S-A/ Genzyme discussions

Sanofi-aventis looking at $20bn acquisition    July 5
S-A in informal talks to acquire Genzyme    July 26
S-A takeover approach rejected    July 27
S-A offers $18.5bn for Genzyme    August 31
S-A's bid for Genzyme gets hostile    October 4
S-A appeals to Genzyme on takeover bid    November 9
Genzyme in talks to foil sanofi-aventis bid    November 15
S-A extends Genzyme offer deadline    December 13
S-A extends Genzyme deadline further    January 24