Genzyme, Sanofi move closer to a deal

Biotechnology company Genzyme today said it has entered into a confidentiality pact permitting French drug-maker Sanofi Aventis to examine its books, an indicator that the two firms are inching closer toward a possible deal.

Genzyme said in a statement that "ongoing discussions with Sanofi-Aventis have progressed to the point where Genzyme's board has authorised the company to enter into a confidentiality agreement with Sanofi-Aventis in order to allow Sanofi to conduct due diligence".

The Cambridge-based company, however, added that it can provide no assurance that discussions with Sanofi will result in a "transaction that will be determined by its board to be in the best interests of the company and its shareholders".

In a filing to the US Securities and Exchange Commission, Genzyme said it will provide information on its profit margins, price lists, customer and supplier lists, purchase orders, financial projections and other information to Sanofi.

Sanofi has agreed not to divulge these details to other parties.

The non-disclosure pact also includes an undertaking by Sanofi not to poach Genzyme employees for a period of up to 12 months from the binding arrangement, dated January 31.

The talks have focused on using a contingent value right -- or CVR -- for alemtuzumab, a Genzyme multiple sclerosis drug in development that has been key to the disagreement over valuation of the company, but Genzyme said it has also discussed "other potential terms for a negotiated transaction".

Sanofi-Aventis, which has a significant presence in India and employs over 1,800 people in the country, has been pursuing Genzyme since last summer.

It extended its $18.5 billion offer for Genzyme for the second time last week without changing the financial terms.

Sanofi-Aventis had said its offer of $69 per Genzyme share was extended till February 15 midnight.

The French firm had made its offer for Genzyme public on August 29 last year and had taken the bid directly to shareholders on October 4 after Genzyme Chief Executive Officer Henri Termeer refused to negotiate, saying the bid "undervalues" the company.