Sanofi-aventis in merger talks with Genzyme

Sanofi-aventis (S-A) has announced that it is in discussions with Genzyme, producer of drugs for rare diseases and has offered to acquire the company for $18.5bn, or $69 a share. Genzyme has stated that the figure is too low and the two companies are looking at a way to bridge the valuation gap with a potential contingent value right (CVR) for multiple sclerosis drug alemtuzumab, which the US biotech company plans to brand as Lemtrada.

S-A first sent a letter to Genzyme's management last July. It launched the tender offer, which expires on January 21, after failing to engage Genzyme executives in talks.

Financial advisers for the two companies are discussing the value of a CVR that would take the total Genzyme offer to around $80 per share from $69 at present if it meets certain milestones, giving the US target a total value of $20.7bn.

A representative from S-A said: "Those discussions are continuing and now include representatives from both companies. There remain significant differences on the terms and conditions of the potential CVR and the value of our offer, and there is no guarantee that the parties will come to an agreement."

A contingent value right, or CVR, is often used when buyers and sellers can't agree on a purchase price and usually kicks in after an acquired company meets sales or regulatory targets.