French drugmaker Sanofi-Aventis would not confirm a report in daily Le Figaro on Friday saying it hoped to reach a takeover deal that would value U.S. target Genzyme at around $76 per share, or some $20 billion.

The position of the group regarding talks with Genzyme remains that contained in the statement we released on Sunday, a Sanofi-Aventis spokesman said.

The total figure would include a cash component of $70 to $71 combined with an earn-out known as a contingent value right (CVR), the Figaro said, citing unnamed sources in the French camp. Sanofi has so far offered $69 a share.

Sanofi and Genzyme said this week that representatives from both companies were now in direct talks about a takeover deal, although hopes for a quick agreement cooled as the two sides noted significant differences remained.

It is clear that Sanofi would have to increase the price a little bit, a fund manager investing in both companies told Reuters. Something between 70 and 80 is an offer almost everybody could feel satisfied with.

Sanofi also confirmed on Friday that two patients suffered liver failure after taking its Multaq heart drug, though it said no causal link had been established with the medicine.

The French drugmaker said it had written to U.S. healthcare professionals informing them of two cases of hepatic failure resulting in liver transplantation in two patients taking Multaq.

The U.S. Food and Drug Administration on Friday issued a drug safety communication about this.

Multaq, which was launched in the United States in July 2009 and in Europe early last year, is one of Sanofi's most important new products, with sales expected to reach $1.35 billion by 2014, according to forecasts from Thomson Reuters Pharma.

Buying Genzyme would give Sanofi a new area for growth in the high-margin business of rare diseases as it seeks to diversify to make up for patent losses that will take out roughly a third of its 2008 sales base through 2013.

The disclosure of direct talks between the two companies followed reports last week that they were moving closer to a deal that would value Genzyme above the $18.5 billion, or $69 per share, hostile offer that Sanofi has extended to shareholders.

I would not call it a big improvement, at least it is some progress. It is only a beginning, the fund manager added. One point we should not underestimate is that so far, at least in public, there has been no second player interested in Genzyme.

It looks like Sanofi is the only one at the moment who could be interested, which is a good bargaining tool for Sanofi.

With Genzyme having rejected Sanofi's takeover offer as too low, the two sides are now talking about a way to bridge the valuation gap by focusing on prospects via a deal structure using a CVR.

A CVR would offer Genzyme shareholders an additional payout based on its Campath medicine being approved for multiple sclerosis and meeting certain revenue targets.

An improved offer of an extra cash top-up plus a CVR would probably not surprise investors -- but $76 would likely be viewed by many Genzyme investors as being on the low side.

Sarasin analyst David Kaegi said on Monday that the French drugmaker might offer another $1-2 per share in cash plus a CVR that could yield $5-8.

Sanofi's existing $69 per share tender offer for Genzyme, which was extended last month, is due to expire on January 21.

Shares in Sanofi were 1.91 percent lower by 1314 GMT, while Genzyme stock in Germany was off 0.98 percent.

Credit Suisse and Goldman Sachs are advising Genzyme. JPMorgan, Evercore Partners and Morgan Stanley are advising Sanofi.

(Reporting by Noelle Mennella, Dominique Vidalon and Ben Hirschler; Additional reporting by Cecilia Valente; Editing by Mike Nesbit and Jane Merriman)

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