Sanofi Issues Bonds to Fund Genzyme Acquisition

Mar 30, 2011

On Mar. 23, 2011, sanofi-aventis offered $7 billion in notes to fund its acquisition of Genzyme. The notes are offered in six tranches scheduled to come due between 2012 and 2021, and the interest rates range from 0.05% to 4%.

Sanofi-aventis named BNP PARIBAS, Bank of America–Merrill Lynch, J.P. Morgan, Société Générale, Crédit Agricole CIB, Deutsche Bank Securities, HSBC, RBS, and Santander as joint book runners for the offering in a press release. Standard and Poor’s rated sanofi AA-, and Moody’s rated the company A2.

If sanofi does not complete the exchange offer for Genzyme shares by Sept. 30, 2011, the company will redeem all the fixed-rate notes and the 2014 floating-rate notes at 101% of par value plus accrued interest by Oct. 31, 2011. Sanofi will use the remaining proceeds from the 2012 floating-rate notes and the 2013 floating-rate notes for general corporate purposes.

In related news, problems in the fill–finish process for Genzyme’s Fabrazyme product will affect patients’ access to the drug. Quality-assurance personnel rejected one lot of Fabrazyme produced at Genzyme’s Allston Landing, Massachusetts, facility, because it did not meet release criteria. The company will fill and finish all future lots of the drug at a contract-manufacturing facility that is performing this operation already.

“Because inventory is so limited, loss of this specific lot of Fabrazyme will have an impact on some patients in the coming months,” said Genzyme in a press release. Some patients may have to delay scheduled infusions immediately, and others may miss one or more infusions during the next few months. The supply reduction will affect all regions, according to the company. Nevertheless, Genzyme is “still on track to return to normal supply of Fabrazyme in the second half of 2011 with the expected approval of our new manufacturing facility in Framingham, Massachusetts,” according to the press release.