Sanofi-aventis to Acquire Genzyme for $74.00 in Cash per Share Plus Contingent Value Right

Sanofi-aventisSanofi-aventis (EURONEXT: SAN and NYSE: SNY) and Genzyme Corporation (NASDAQ: GENZ) have entered into a definitive agreement under which sanofi-aventis is to acquire Genzyme for $74.00 per share in cash, or approximately $20.1 billion. In addition to the cash payment, each Genzyme shareholder will receive one Contingent Value Right (CVR) for each share they own, entitling the holder to receive additional cash payments if specified milestones related to Lemtrada™ (alemtuzumab MS) are achieved over time or a milestone related to production volumes in 2011 for Cerezyme® and Fabrazyme® is achieved.

The transaction, which has been unanimously approved by the Boards of Directors of both companies, is expected to close early in the second quarter of 2011, subject to customary closing conditions. The acquisition is expected to be accretive to sanofi-aventis' Business Net earnings per share in the first year following closing, and accretive to Business Net earnings per share in the range of €0.75 – €1.00 by 2013.

"This agreement with Genzyme is both consistent with our long-term strategy and creates significant long-term value for our shareholders," said Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. “This transaction will create a meaningful new growth platform for sanofi-aventis while expanding our footprint in biotechnology. We expect it to be accretive from year one, and the CVR structure, which served as an important value bridge between our two companies, rewards both Genzyme and sanofi-aventis shareholders, particularly if Lemtrada™ outperforms the market's current expectations."

"This transaction represents a new beginning for Genzyme," said Henri A. Termeer, Chairman of the Board, President and Chief Executive Officer of Genzyme Corporation. "Genzyme has a record of innovation and a unique and pioneering approach to serving patients. We also share an exciting vision of the future, one in which Genzyme and sanofi-aventis grow and innovate by developing breakthrough treatments that change the lives of people with serious diseases. Sanofi-aventis believes in what we do, in our people and in our potential. We look forward to building a sustainable future together."

Terms of the CVR agreement call for additional cash payments under certain circumstances. The CVR will be publicly traded. The agreement is structured such that the economic upside at each milestone is shared between sanofi-aventis and Genzyme shareholders. The CVR terminates on December 31, 2020 or earlier if the fourth product sales milestone has been achieved.

The one-time milestones and payments can be summarized as follows:

  • $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) indication
  • $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

Sanofi-aventis' global footprint, significant resources and proven track record of successfully expanding franchises will create new long-term growth opportunities for the combined company, particularly in emerging markets. Genzyme will become an important new platform in sanofiaventis' sustainable growth strategy and expand the company's presence in biotechnology. Sanofi-aventis intends to make Genzyme its global center for excellence in rare diseases and the acquisition will reinforce sanofi-aventis' commitment to the greater Boston area, where it already has a sizeable presence.

Beyond rare diseases, Genzyme has built strong Renal-Endocrinology, Hematology-Oncology and Biosurgery businesses that are complementary to existing sanofi-aventis businesses and include highly differentiated, market-leading products that provide significant benefit to patients. Sanofi-aventis will work with Genzyme through the integration process to develop plans to enhance the opportunities for these businesses going forward. Consistent with sanofi-aventis' approach in other transactions, Genzyme will retain its corporate brand.

Genzyme and sanofi-aventis will immediately begin integration planning, including the formation of a joint Integration Steering Committee. Henri A. Termeer will resign as Chairman of the Board, President and Chief Executive Officer of Genzyme following the close of the transaction, but will advise on the integration in his role as Co-Chairman of the Integration Steering Committee with Christopher A. Viehbacher.

Within 15 business days of this agreement, sanofi-aventis will amend its existing tender offer to conform to the terms of the merger agreement and file a registration statement for the CVR with the U.S. Securities and Exchange Commission. Pending this amendment, sanofi-aventis also announced that it has extended its current tender offer, which is now scheduled to expire at 5:00 p.m. New York City time on March 16, 2011.

The depositary for the tender offer has advised sanofi-aventis that, as of the close of business on February 15, 2011, approximately 2,080,221 shares of Genzyme common stock (not including the 100 shares owned by sanofi-aventis) were tendered and not withdrawn, representing approximately 0.76% of the outstanding shares on a fully-diluted basis.

Sanofi-aventis' acquisition of Genzyme has already received anti-trust clearance from the European Commission and the United States Federal Trade Commission.

Evercore Partners and J.P. Morgan served as sanofi-aventis' lead financial advisors on the transaction, and Weil, Gotshal & Manges LLP served as its legal counsel. Credit Suisse and Goldman Sachs served as financial advisors to Genzyme. Ropes & Gray LLP served as Genzyme's legal counsel, while Wachtell, Lipton, Rosen & Katz served as legal counsel to Genzyme's independent directors.

About sanofi-aventis
Sanofi-aventis, a leading global pharmaceutical company, discovers, develops and distributes therapeutic solutions to improve the lives of everyone. Sanofi-aventis is listed in Paris (EURONEXT: SAN) and in New York (NYSE: SNY).

About Genzyme
One of the world's leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with approximately 10,000 employees in locations spanning the globe. With many established products and services helping patients in approximately 100 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company's products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need.

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