Sanofi-Aventis, Genzyme in talks to structure $80 per share deal
08 January 2011
French drug giant Sanofi-Aventis and Genzyme Corp have finally started discussions on structuring a potential merger deal that could value the US-based biotechnology firm at around $80 per share, the Wall Street Journal yesterday reported, citing people familiar with the matter.
The talks to arrive at the $80 per share figure would include a structure known as a contingent value right (CVR), which is adopted in certain mergers and acquisitions as the true value of a potential product of a company will only be known after it hits the market.
In this proposed merger, future sales forecast of Genzyme's experimental multiple sclerosis (MS) drug Campath not only differs widely between the two companies but even analysts have arrived at different figures.
The two companies are trying to narrow down their differences on this and structure a deal that would include a CVR that offers Genzyme's shareholders an additional payout if Campath reaches certain sales milestones.
Genzyme had earlier refused to talk to Sanofi and had rejected its August 2010 $69-a-share or $18.5-billion all-cash offer saying that the unrealistic starting price of the bid dramatically undervalues the company. (See: Genzyme board rejects Sanofi-Aventis $18.5-billion takeover offer)
Genzyme said that the French drug maker had not taken into account the potential of its new-product pipeline that includes Campath.