France's Sanofi-Aventis has agreed to raise its bid for Genzyme Corp to the low $70s-per-share range, plus a milestone payment based on the performance of an experimental drug, a source familiar with the situation said.

The total valuation for Genzyme depends on the outcome of due diligence as Sanofi looks at the U.S. biotech company's financial records, the source said on Tuesday.

Sanofi agreed to raise the takeover price from its initial offer of $69 per share to gain access to Genzyme's books, that source said. Still, Sanofi did not raise the offer as high as the $75 per share value Genzyme had sought, that source said.

The final valuation could be in the "very high $70s," including the contingent value right (CVR), or payout over time based on the performance of Genzyme's experimental multiple sclerosis drug, Lemtrada, a second source said.

The sources requested anonymity because the talks are not public.

Bloomberg reported the total value would be in the range of $76 or $77 per share, including the potential future payout. Citing people with knowledge of the talks between the two companies, the Bloomberg report said Sanofi may increase its initial $69 per share offer by $2 per share in cash.

It would also add a CVR of up to $6 per share if Genzyme's Lemtrada drug for multiple sclerosis proves successful, according to the report.

The Wall Street Journal reported that the base price of the offer was $74 per share, with a CVR starting at $2 per share. The CVR could eventually rise to as high as $5 to $6 a share, according to the report.

Genzyme could not be reached for comment. Sanofi declined comment.

A total deal price of $77 a share would add "significantly" to Sanofi's earnings, Leerink Swann analysts said in a research report.

"Aggressive cost cutting across the Genzyme oncology and cardio-renal segments alone offer substantial cost synergy opportunities that would drive potential upside to our analysis," Leerink Swann analysts said in the report. "We continue to view resolution of this event as the key catalyst for Sanofi shares in 2011."

"The CVR is not the crucial number. The crucial number is the base price. The rest of it is what might get realized over time," said an arbitrager who declined to be named because he was not authorized to speak with the media.

"The whole value may allow Genzyme to say, 'We held out for a higher number,' but the CVR may never come to fruition," said the trader, who specializes in takeover stocks.

Industry analysts have said they expect Sanofi to raise the cash portion of its bid to anywhere between $72 to $75 per share, with an additional CVR payout valued as much as $5 to $10 per share.

On Monday, Reuters reported that the two companies had hammered out an agreement in principle on deal terms, pending due diligence.

A deal could be reached in the next week or so, ahead of a Feb. 15 deadline for Sanofi's tender offer to shareholders, a source previously told Reuters.

Genzyme has repeatedly rejected Sanofi's $18.5 billion, or $69 per share, hostile offer launched in early October. The two sides have been slowly moving closer in direct talks in recent weeks.

The two companies have been discussing a potential deal, including a CVR for several weeks, trying to bridge a wide gap in their expectations for Lemtrada. Genzyme has forecast peak annual sales of $3.5 billion, while Sanofi, using the average of several analyst estimates, expects only about $700 million.

A CVR is a tradable instrument whose value will depend on how much investors believe in the prospects for Lemtrada.