UPDATE 3-Sanofi wins control of Genzyme, CVRs fetch $2.35

* Sanofi says 84.6 pct of Genzyme shares tendered

* CVRs trading at $2.35 in early Nasdaq dealings

* Sanofi to drop Aventis from name – CEO

* French drugmaker’s shares up 0.2 percent

(Updates with start of trading in CVRs, analyst comment)

By James Regan and Ben Hirschler

PARIS/LONDON, April 4 (Reuters) – Certificates used by
Sanofi-Aventis SA (SASY.PA: Quote, Profile, Research) to win Genzyme Corp (GENZ.O: Quote, Profile, Research) started
trading at a steep discount to their best-case value on Monday
after the French drugmaker gained control of the biotech group.

Taking over U.S.-based Genzyme gives Sanofi a new business
in treating rare diseases that is expected to boost earnings
from the first year after completion, offsetting lost revenue
from drugs facing generic competition.

Investors holding 84.6 percent of Genzyme accepted Sanofi’s
bid of $20.1 billion offer, or $74 a share, the French company
said in a statement.

Shareholders are also receiving one so-called contingent
value right (CVR) per share entitling them to future payments if
specified milestones relating to several Genzyme drugs are met.

The CVRs trade on the U.S. Nasdaq market under the ticker
(GCVRZ.O: Quote, Profile, Research) and, as expected, are selling for less than their
potential value.

The CVRs started trading on Monday at $2.30 each and moved
up to $2.35 by 1355 GMT, against a maximum possible payout of
$14. A “grey” market had valued them at $2.23 on Friday.

Mark Schoenebaum, an industry analyst at ISI Group, said he
believed the CVRs should be valued at around $2.30 to $2.60.

Holders will only receive the full $14 per CVR — worth some
$3.8 billion — if Genzyme’s experimental multiple sclerosis (MS)
drug Lemtrada is approved by regulators and meets its most
ambitious sales targets by 2020.

The deep discount in the traded CVR price reflects the long
time-frame and the risks associated with Lemtrada, which is
already sold under the brand name Campath for cancer but has yet
to be approved in MS.

Expected sales of Lemtrada was a key bone of contention
between the two companies during the takeover battle.

BRAKES ON OTHER DEALS

Sanofi is to give remaining Genzyme shareholders a further
four days until Thursday to tender their shares.

Sanofi Chief Executive Chris Viehbacher suggested the deal
would put the brakes on further big transactions for now.

“When you spend 20 billion, you lock in that strategy … if
we do it, that means we don’t do other things,” he told BFM
Radio.

“Up until now, transactions of 1, 2 billion, well, that
doesn’t prevent the group from being flexible, but 20 billion,
that stops us in fact from doing other transactions.”

The CEO also said the purchase of Genzyme, which Sanofi will
make its rare diseases arm, marked a new phase for the company
and that it was time to simplify its name.

“Sanofi-Aventis is a very complicated name to say in several
languages, in China, as in the United States, and with the
acquisition of Genzyme, in the end we said, well, we have a
bigger family and now in the future we are the Sanofi family,”
he said.

The integration process for the two companies was
“progressing well and remains on track”, Viehbacher added in the
statement.
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For a Take a Look on the deal: [ID:nLDE70U1H1]

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Sanofi clinched its long-sought deal to buy Genzyme in
February when it sweetened its offer to include CVRs and more
cash. Genzyme’s board unanimously recommended it.

Genzyme investors can be paid $1 per CVR if Genzyme meets
specified production levels of Cerezyme and Fabrazyme this year
after the two key rare disease drugs were in short supply due to
contamination problems at a manufacturing plant.

Another dollar will be paid if the U.S. health regulator,
the Food and Drug Administration (FDA), clears Genzyme’s
Lemtrada multiple sclerosis drug for marketing, which could come
in 2012 or 2013.

Sanofi shares were down 0.1 percent at 50.22 euros.
(Additional report by Caroline Jacobs; Editing by Vinu
Pilakkott and Mike Nesbit)

UPDATE 3-Sanofi wins control of Genzyme, CVRs fetch $2.35