Genzyme sells testing business to LabCorp for $925 million; plans job cuts

Already itself facing a $18.5 billion ($69 per share) takeover from France’s Sanofi-Aventis, which it has rebuffed as inadequate, troubled US biotechnology firm Genzyme (Nasdaq: GENZ) revealed yesterday that it has agreed to sell its diagnostic testing business unit, Genzyme Genetics, to fellow USA-based Laboratory Corporation of America (NYSE: LH) for a consideration of $925 million. The Cambridge, Massachusetts biotech firm had put up the assets for sale in May under a plan to increase shareholder value (The Pharma Letter’s passim).

Genzyme’s shares dipped 0.7% to $70.29 while Sanofi-Aventis (NYSE: SNY) rose 1.1% 40.07 euros on the Paris bourse. There were suggestions that the French drug major would be forced to up its offer, but Bloomberg quoted Sanofi-Aventis spokesman Jean-Marck Podvin as saying: “Our offer to acquire Genzyme for $69 a share in cash remains unchanged.”

Under the terms of the agreement, LabCorp will purchase the business in its entirety, including all testing services, technology, intellectual property rights, and its nine testing laboratories, which together generated revenues of around $370 million last year. LabCorp is committed to offer employment to the unit’s approximately 1,900 staff on closing, including senior management. The transaction is subject to customary conditions, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, with the goal of closing before the end of the year.