U.S. biotechnology company Genzyme will sell its diagnostics business to Japan's Sekisui Chemical for $265 million, one of three units it designated for sale in a bid to shore up investor confidence.

The deal comes as Genzyme, a specialist in rare diseases, looks to fend off a $18.5 billion hostile takeover bid by French drugmaker Sanofi-Aventis for the entire company. Genzyme has dismissed the offer as too low.

Genzyme said in May that it was looking into selling three businesses - genetic testing, diagnostic products and pharmaceutical materials - and agreed in September to sell the genetics business for $925 million.

Sekisui, which has positioned its drug business as a focus area, said in a statement that it would use the United States and European sales resources of the Genzyme unit to expand its medical products business in those regions.

Shares of Sekisui extended gains after the announcement to close up 5.5% at 591 yen, outperforming a 2.1% rise in the Nikkei stock average.