Sanofi Hopes To Win Genzyme For $76/Share

French drugmaker Sanofi-Aventis hopes to reach a takeover deal that would value U.S. target Genzyme at around $76 per share, or some $20 billion, the French daily newspaper Le Figaro said on Friday.

The total figure would include a cash component of $70 to $71 combined with an earn-out known as a contingent value right (CVR), the article said, citing unnamed sources in the French camp.

Sanofi could not immediately be reached to comment on the report.

Sanofi and Genzyme said early this week that representatives from both companies were now in direct talks about a takeover deal, although hopes for a quick agreement cooled as the two sides noted significant differences remained.

The disclosure of direct talks followed reports at the end of last week that the companies were moving closer to a deal that would value Genzyme above the $18.5 billion, or $69 per share, hostile offer that Sanofi has extended to shareholders.

With Genzyme having rejected Sanofi's takeover offer as too low, the two sides are now talking about a way to bridge the evaluation gap by focusing on prospects via a deal structure using a CVR.

A CVR would offer Genzyme shareholders an additional payout based on its Campath medicine being approved for multiple sclerosis and meeting certain revenue targets.

An improved offer consisting of an extra cash top-up plus a CVR would probably not surprise investors - but $76 would likely be viewed by many Genzyme investors as being on the low side.

Sarasin analyst David Kaegi said on Monday that the French drugmaker might offer another $1-2 per share in cash plus a CVR that could yield $5-8.

Buying Genzyme would give Sanofi a new area for growth in the high-margin business of rare diseases as it seeks to diversify to make up for patent losses that will take out roughly a third of its 2008 sales base through to 2013.

Sanofi's existing $69 per share tender offer for Genzyme, which was extended last month, is due to expire on Jan. 21.