Genzyme, Sanofi-Aventis in acquisition talks

By Robert Weisman, Globe staff

Executives at Genzyme Corp. and French drugmaker Sanofi-Aventis SA are locked in negotiations after Sanofi offered to buy the pioneering Cambridge firm that helped turn the Massachusetts biotechnology industry into a global player.

The parties still remained far apart on the price for Genzyme, the largest biotech in Massachusetts, according to a person who spoke on condition of anonymity because he was not authorized to discuss the bid made last week. Analysts expect a sale price to exceed Genzyme's market value of $18.8 billion.

The deal may not happen but Sanofi's interest puts Genzyme in play. Ultimately the maker of expensive drugs to treat rare genetic disorders could draw multiple bidders or a hostile takeover attempt, analysts say.

Longtime Genzyme chief executive Henri Termeer, the architect of the company's success and one of the most recognized names in the biotech industry, declined comment, through a spokeswoman.

Amid rising expectations of a purchase, investors again snapped up Genzyme shares today, which closed up 80 cents at $70.36, just shy of their 52-week high. Market watchers said Genzyme could fetch $75 to $80 a share -- or even more, if competing offers emerge -- from potential buyers. Some media were reporting tonight that Genzyme shareholders want more than $80 a share.

"Once a company gets put into play, investment bankers will be actively seeking other bids," said Sven H. Borho, founding general partner of Orbimed Advisors, a New York investment firm that manages health care funds. "The board has a duty to shareholders. If there's a pretty significant bid coming, they have to take it seriously."

Among other potential suitors that certainly would be approached by Genzyme's investment bankers, Borho said, are British pharmaceutical giant GlaxoSmithKline PLC and American heavyweights Pfizer Inc., Merck & Co., and Johnson & Johnson. All are businesses seeking to expand their product lines to compete globally at a time of increasing consolidation in the life sciences industry.

Wall Street has been buzzing about a potential Genzyme buyout, though officials at both Genzyme and Sanofi both declined comment on the matter.

In a letter to biotech clients released today, research analysts Mark Dainty and Yaron Werber of financial firm Citigroup wrote that "the process for an acquisition of Genzyme by Sanofi-Aventis appears to be accelerating." While the initial bid might be $70 a share, the letter said, the eventual price could climb to between $74 and $77 a share.

Some analysts said Genzyme's board would likely hold out for a price closer to the $80-a-share peak the company's stock hit in the fall of 2008 before a series of production problems -- including a virus found in its Allston Landing plant last June -- sent the shares tumbling.

Genzyme's shares have been recovering in recent months as executives have taken steps to fix its manufacturing problems and resume full shipment of drugs to treat enzyme deficiencies such as Gaucher and Fabry diseases. The drugs -- Cerezyme and Fabrazyme -- can cost as much as $200,000 to $300,000 annually per patient, most of which is covered by insurance.