A significant merger in the health industry is expected to take place later this week. It is anticipated that Sanofi-Aventis will acquire Genzyme Corp. later this week. The deal has taken longer than expected due to prolonged assessment of Genzyme’s financial records and manufacturing capabilities. Sanofi, a French pharmaceutical company ranking fourth in the world for prescription sales, has been concerned about the production complications associated with Genzyme’s production facility shutdown in 2009.
Executives want to be thorough in their examination, but both parties are broadly in agreement that the deal is expected to go through in a short amount of time. Boards are meeting on Sunday, to get an update on progress made on the deal, but nothing beyond that has been scheduled. These indications show that the companies are entering the final stretch of months of negotiation for this merger.
According to the Wall Street Journal, the tentative offer from Sanofi has been reported to be around $74 per share equating to about $19 billion. The offer made by Sanofi originally was $69 per share. If the merger goes through, it marks one of the largest mergers in the past few years. Sanofi serves to benefit highly from this acquisition, as it will bolster its drug pipeline significantly.
According to bizjournals, the deal also would include a package for Genzyme investors to receive a contingent value right (CVR), that entitles them to additional future payments based on the sales benchmarks dictated by Sanofi. If, for example, Genzyme drugs such as Campath or Lemtrada, hit the company’s sales goal, the CVR, which would trade on the stock exchange, could be world as much as $5 or $6. Genzyme CEO Henri Termeer has said that with the release of the new positive clinical data for alemtuzumab which will be released three to four months from now, could push the value of the CVR even higher.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com