Genzyme finally agrees takeover deal, as Sanofi-Aventis ups its offer to $74/share plus CVR

Confirming recent speculation French drug major Sanofi-Aventis (Euronext: SAN) and US biotech Genzyme (Nasdaq: GENZ) have finally reached agreement on an acceptable acquisition price, when the Paris-based firm this morning announced that it has raised its original offer of $69 a share to $74, for a total value of 20.1 billion, which has been unanimously agreed by both companies’ boards of directors.

The news saw Sanofi-Aventis’s shares rise 3.5% to 51.51 euros in early trading. Genzyme’s stock was trading at $74.38 in afternoon trading yesterday up from $71.77 at the previous close as speculation mounted that a deal would be announced today.

In addition to the cash payment, each Genzyme shareholder will receive one contingent value right (CVR) for each share they own, entitling the holder to receive additional cash payments if specified milestones related to the investigational multiple sclerosis drug Lemtrada (alemtuzumab) are achieved over time, or a milestone related to production volumes in 2011 for Gaucher disease drug Cerezyme (imiglucerase for injection) and Fabry disease agent Fabrazyme (agalsidase beta) is achieved. As previously reported, the two latter drugs have seen severe sales declines due to manufacturing problems. The CVR, detailed below, could add $2.7 billion to the total value of the deal.