Sanofi-aventis and Genzyme reach agreement at last
Genzyme to become sanofi-aventis\' global centre for excellence in rare diseases
Sanofi-aventis and Genzyme Corporation have entered into a definitive agreement under which sanofi-aventis is to acquire Genzyme for US$74.00 per share in cash, or approximately $20.1bn (€14.8bn).
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 Lemtrada (alemtuzumab MS) are achieved over time or a milestone related to production volumes in 2011 for Cerezyme and Fabrazyme is achieved.
The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close early in the second quarter of 2011, subject to customary closing conditions. The acquisition has already received anti-trust clearance from the European Commission and the US Federal Trade Commission.
Genzyme will become an important new platform in sanofi-aventis' sustainable growth strategy and expand the company's presence in biotechnology. Sanofi-aventis intends to make Genzyme its global centre for excellence in rare diseases and the acquisition will reinforce sanofi-aventis' commitment to the greater Boston area, where it already has a sizeable presence.
‘This agreement with Genzyme is both consistent with our long-term strategy and will create a meaningful new growth platform for sanofi-aventis while expanding our footprint in biotechnology,’ said Christopher A. Viehbacher, ceo of sanofi-aventis. ‘The CVR structure, which served as an important value bridge between our two companies, rewards both Genzyme and sanofi-aventis shareholders, particularly if Lemtrada outperforms the market's current expectations.’
Terms of the CVR agreement call for additional cash payments under certain circumstances. The CVR will be publicly traded. The agreement is structured such that the economic upside at each milestone is shared between sanofi-aventis and Genzyme shareholders. The CVR terminates on 31 December 2020 or earlier if the fourth product sales milestone has been achieved.
The one-time milestones and payments can be summarised as follows:
- $1.00 per CVR if specified Cerezyme/Fabrazyme production levels are met in 2011
- $1.00 per CVR upon final FDA approval of Lemtrada for multiple sclerosis indication
- $2.00 per CVR if net sales post launch exceed an aggregate of $400m within specified periods per territory
- $3.00 per CVR if global net sales exceed $1.8bn
- $4.00 per CVR if global net sales exceed $2.3bn
- $3.00 per CVR if global net sales exceed $2.8bn
‘This transaction represents a new beginning for Genzyme,’ said Henri A. Termeer, chairman of the board, president and ceo of Genzyme Corporation. ‘Genzyme has a record of innovation and a unique and pioneering approach to serving patients. We also share an exciting vision of the future, one in which Genzyme and sanofi-aventis grow and innovate by developing breakthrough treatments that change the lives of people with serious diseases.
‘Sanofi-aventis believes in what we do, in our people and in our potential. We look forward to building a sustainable future together.’
Genzyme and sanofi-aventis will immediately begin integration planning, including the formation of a joint Integration Steering Committee. Termeer will resign as chairman of the board, president and ceo of Genzyme following the close of the transaction, but will advise on the integration in his role as co-chairman of the Integration Steering Committee with Viehbacher.
Consistent with sanofi-aventis' approach in other transactions, Genzyme will retain its corporate brand.
