Under the agreement, Genzyme investors will receive $74 per share in cash plus a contingent value right, or CVR, tied to Genzyme's experimental multiple sclerosis drug Lemtrada.
The value of the CVR could not immediately be established.
The deal is expected to be announced by Wednesday morning, the sources said. The two companies' boards are expected to vote on the pact shortly.
The deal -- the second-biggest in biotech history -- gives France's Sanofi, which has pursued Genzyme for nearly nine months, a foothold in the market to treat rare diseases. And it helps Sanofi compensate for declining revenue from drugs that lose patent protection.
Officials at Sanofi were not immediately available for a comment.
Bo Piela, a spokesman for Cambridge, Massachusetts-based Genzyme, said he cannot confirm that an agreement has been reached.
Genzyme shares rose 3.5 percent in midday trading to $74.28 on Nasdaq. Sanofi's U.S. shares rose 1.8 percent.
Genzyme shareholders last year rejected an initial offer from Sanofi of $69 per share. A Reuters poll last August indicated that a majority of shareholders would be willing to sell their shares for a price between $75 and $79.
Sources previously told Reuters the CVR would likely be valued at $5 to $6 a share. The CVR will initially trade at less than that value as short-term investors and index funds, which do not normally like owning this kind of instrument, move quickly to sell.
Genzyme was the first company to show that money could be made by making drugs for diseases with small patient populations. In 2009 it generated revenue of $4.5 billion, enough to replace roughly a third of the sales Sanofi is expected to lose through 2013 to generic competition.
(Reporting by Toni Clarke, editing by Maureen Bavdek and John Wallace)