Sanofi gains control of Genzyme, CVRs set to trade

French drugmaker Sanofi-Aventis said it had gained control of Genzyme, with trading in certificates used to help win over shareholders in the US biotech set to start trading later on Monday.

Investors holding 84.6% of Genzyme accepted Sanofi's bid of USD 20.1 billion offer, or USD 74 a share, the French company said in a statement on Monday.
Shareholders are also receiving one certificate per share entitling them to future payments if specified milestones relating to several Genzyme treatments are met.
The so-called contingent value rights (CVR) will begin trading on the US Nasdaq stock exchange later on Monday under the ticker, and may give an indication of how confident the market is about the prospects for Genzyme's drugs.
Sanofi-Aventis also said on Monday it would give remaining Genzyme shareholders a further four days until Thursday to tender their shares.
Sanofi Chief Executive Chris Viehbacher suggested the deal would put the brakes on further big transactions for now.
"When you spend 20 billion, you lock in that strategy... if we do it, that means we don't do other things," Viehbacher told BFM Radio.
"Up until now, transactions of 1, 2 billion, well, that doesn't prevent the group from being flexible, but 20 billion, that stops us in fact from doing other transactions."
The CEO also said the purchase of Genzyme, which Sanofi will make its rare diseases arm, marked a new phase for the company and that it was time to simplify its name.
"Sanofi-Aventis is a very complicated name to say in several languages, in China, as in the United States, and with the acquisition of Genzyme, in the end we said, well, we have a bigger family and now in the future we are the Sanofi family," he said.
The integration process for the two companies was "progressing well and remains on track", Viehbacher added in the statement.
Sanofi clinched its long-sought deal to buy Genzyme in February when it sweetened its offer to include CVRs and more cash. Genzyme's board unanimously recommended it.
The CVR runs through 2020 and if all milestones are achieved could pay USD 3.8 billion in total.
Genzyme investors can be paid USD 1 per CVR if Genzyme meets specified production levels of Cerezyme and Fabrazyme this year after the two key rare disease drugs were in short supply due to contamination problems at a manufacturing plant.
Another dollar will be paid if the US health regulator, the Food and Drug Administration (FDA), clears Genzyme's Lemtrada multiple sclerosis drug for marketing, which could come in 2012.
Further away are milestone fees tied to the sales performance of the drug whose sales potential was a key bone of contention between the two companies during the takeover battle.
The face value of one CVR is as much as USD 14, to be paid over time if targets are met, but analysts expect it will be highly discounted in the market given the risks tied to Lemtrada, which has not yet been approved, and the long timeframe.
Sanofi shares were down 0.2% at 50.17 euros in early afternoon trading.