Paris-based drugmaker Sanofi-Aventis may need weeks of haggling to get a deal on buying U.S. biotech firm Genzyme as the two appear wide apart over price.

Neither party has publicly acknowledged Chief Executive Chris Viehbacher's approach and fund managers reckon the negotiating partners may stay silent this month, continuing their talks as the rest of France goes on holiday.

"I wouldn't be surprised if we didn't see an offer until September with the August slowdown but I do think an offer will emerge," said one manager at a U.S. hedge fund, which holds shares in Genzyme, asking not to be named.

Sanofi has proposed paying $69 per share for Genzyme, according to sources familiar with the matter, seeking access to its niche business of drugs for rare diseases, which can command astronomical prices but rarely face opposition from medical insurers.

The two sides are "communicating," other sources familiar with the situation have said, but Sanofi's opening bid is some 16 percent below the $21.4 billion price tag that one of the sources said Genzyme wants.

"Both sides are using the press for price discovery. They are leaking numbers to see what reaction they get from shareholders," a UK hedge fund manager said.

"The consensus is that a deal will get done but Sanofi needs to avoid overpaying. There are some aggressive Genzyme shareholders talking the price up. They want to hit the magic number of around $20 billion," he said.

Hedge funds try to make money by taking long or short positions in stocks of companies involved in merger talks, so are often keen followers of deal negotiations.

Genzyme Cornered?
Buying Genzyme would fit Sanofi, which is facing patent expiries, but Viehbacher, in his job since late 2008, will not go to extremes on price, industry analysts say.

"Chris Viehbacher has an excellent record of not overpaying for transactions. Why would this change?" Delphine Le Louet, analyst at Lombard Odier Darier Hentsch said. "One can do a lot with $20 billion and Genzyme will be the first to know."

Viehbacher's strategy has been to grow Sanofi with deals of up to €15 billion or $20 billion. He has dismissed - but not excluded - mega-mergers that typically seek to squeeze out savings from synergies and are time-consuming.

Sanofi has swooped on Genzyme at a time that its share price is depressed by manufacturing problems, which has opened the door to activist investor Carl Icahn, who has a reputation for taking control of underperforming companies. Having bought in at a lower level Icahn can be expected to accept a narrower premium than longer-standing investors, and Genzyme has few takeover defenses up its sleeve that could hold Sanofi off if it decided to go hostile.

Analysts say Icahn has been trying to flag interest for the company, hoping to attract other bidders and drive up the price. But so far, no rival bidders have materialized.

"If Genzyme says no, they have to show investors how they will get the share price back to the price of the offer. It will be difficult for them to say ‘We didn't want to'," said Marc Booty, asset manager at Pictet Asset Management.

Sanofi could win Genzyme with a sweetened offer of around $78 a share, or $20.8 billion, according to analysts and shareholders polled by Reuters.

A separate poll of 27 Genzyme shareholders showed that 13 would be willing to sell their shares for between $75 and $79 a share, while 10 would hold out for $80 or more.

Calling Genzyme "a relatively risky purchase," Claude Allary, managing partner at Bionest consultants, expected Sanofi's board to set the offer limit at $70-75 a share, largely because of the manufacturing problems.

But only a few targets similar in size and as appealing as Genzyme are around. Sanofi has been linked by analysts to Botox maker Allergan, whose presence in eye diseases could also appeal to Sanofi. The company wants to expand in eyecare, putting contact lens maker Bausch & Lomb in prospect.

Other targets might include Biogen Idec, Shire, Baxter and Cephalon as other possibilities, analysts said.