M&A - Europe

UPDATE 2-Sanofi extends Genzyme bid again as talks continue

* Extends $69 per Genzyme share offer until Feb. 15

* Says 0.4 percent of Genzyme shares tendered so far

* Discussions continue but no guarantee of agreement

* Significant differences remain over offer value

* Sanofi shares down 0.2 percent

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By Caroline Jacobs

PARIS, Jan 24 (Reuters) - French drugmaker Sanofi-Aventis SASY.PA extended its $18.5 billion tender offer for U.S. biotech Genzyme GENZ.O on Monday for a second time, as the companies continued talks on a deal.

Sanofi said 0.4 percent of Genzyme’s shares were tendered by a Friday deadline, adding its $69 per share offer, which has been rejected by Genzyme, would now run until Feb. 15.

Genzyme, which specialises in rare diseases, has said Sanofi’s bid was too low given it has been recovering from a manufacturing crisis and has high hopes for experimental multiple sclerosis treatment Lemtrada.

Following months of deadlock, the companies started talks this month by addressing the possible use of contingent value rights (CVR), an extra fee shareholders will receive if Lemtrada hits certain milestones.

“Although discussions have continued and have included commercial teams and executives of both Sanofi-Aventis and Genzyme, there remain significant differences on the potential CVR and value of Sanofi-Aventis’s offer. There is no guarantee that the parties will come to an agreement,” Sanofi said.

Genzyme has forecast peak annual sales of $3.5 billion for Lemtrada, while Sanofi, using the average outcome of several analyst estimates, expects sales of about $700 million.

A CVR would come on top of Sanofi’s cash bid, which analysts widely expect will be raised. Genzyme shares have been trading at around $72 each.

“We still think that Sanofi-Aventis will raise its offer slightly (to $71-$72 per share) and that it will combine this offer with the issue of a CVR,” CM-CIC Securities analyst Arsene Guekam said in a note.

Genzyme chief executive Henri Termeer said on Wednesday that, at the very least, talks on a CVR were proving useful in establishing the right value for Genzyme. [ID:nN19218960]

Some investors expected a deal in the high $70s and possibly $80, depending on how it is structured.

“It is no surprise, but it is nonetheless going rather in the right direction as the group said the commercial teams are also working on the CVR,” Oddo Securities analyst Jean-Jacques Le Fur said on Monday.

When the first deadline ran out in mid-December for Sanofi’s initial offer of $69 a share, 0.9 percent of shares were handed in.

Sanofi shares were down 0.2 percent at 0825 GMT. (Additional reporting by Noelle Mennella; Editing by James Regan and Dan Lalor)