Sanofi-Aventis (SNY) recently completed its acquisition of biotech company Genzyme Corporation. With the completion of the acquisition, Genzyme, now a wholly-owned subsidiary of Sanofi, will be Sanofi’s global center for excellence in rare diseases.
Sanofi said that 237,312,826 shares of Genzyme were validly tendered, representing about 89.4% of Genzyme's outstanding shares.
As a reminder, per the terms of the deal announced in Feb 2011, Genzyme shareholders received $ 74 per share in cash (or $ 20.1 billion) in addition to a contingent value right (CVR) for each share. The CVR allows each shareholder to receive additional payments related to Lemtrada (alemtuzumab for multiple sclerosis) and the achievement of specified production volumes in 2011 for Cerezyme and Fabrazyme.
Acquisition to Create New Source of Growth at Sanofi
With this acquisition, Sanofi is looking to create a new source of growth. The company has a high exposure to generic risk on many of its leading franchises. The company suffered a blow with the entry of a generic version of its anti-coagulant Lovenox, which was a major contributor to the top-line.
In addition to Lovenox, we see generic risk to other products as well. In such a scenario, it is imperative for Sanofi to successfully develop and launch new products in order to make up for the loss of revenues once major products lose exclusivity and start facing generic competition. The acquisition of Genzyme will boost Sanofi’s revenues as well as its pipeline.
Sanofi will also get the chance to expand its presence in biotechnology. Genzyme’s lead products include Cerezyme (Gaucher disease) and Fabrazyme (Fabry’s disease). Cerezyme’s primary competitor in the Gaucher disease market is Shire’s (SHPGY) Vpriv.
At the time of announcing the acquisition, Sanofi said that it expects the deal to be accretive to its business net EPS in the first year after closing. By 2013, the company expects the deal to be accretive by €0.75 – €1.00.
Sanofi is using the proceeds from its issuance of $ 7 billion in dollar-denominated notes, $ 7 billion raised through its US commercial paper program, a drawing of $ 4 billion on the bridge facility negotiated in October 2010, and available cash, to finance the $ 20.1 billion acquisition.
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