Citi Discusses Sanofi, Genzyme Deal (SNY, GENZ)

Citi Investment Research is out with a research report on the Sanofi-Aventis SNY, Genzyme GENZ deal. Sanofi purchased Genzyme at a value of $74 per share, with a contingent value right (CVR) to be as high as $14 per share. In the note, Citi writes, "Combined with an additional contingent value right (CVR) dependent on achievement of manufacturing milestones and the success of pipeline MS drug Lemtrada. The deal has been agreed by both boards and is anticipated to close early in the 2Q11. The tender offer will be extended through to 1700 EST March 16 2011, and we expect the offer to be taken up by the majority of shareholders." With regards to the CVR, Citi writes, "The milestone payments of up to $14/sh or $3.8bn are dependent on the following conditions: – $1.00 per CVR if specified Cerezyme/Fabrazyme production levels are met in 2011 – $1.00 per CVR upon final FDA approval of Lemtrada for multiple sclerosis (MS) – $2.00 per CVR if net sales post launch exceed an aggregate of $400 million within specified periods per territory – $3.00 per CVR if global net sales exceed $1.8 billion – $4.00 per CVR if global net sales exceed $2.3 billion – $3.00 per CVR if global net sales exceed $2.8 billion."