French drug maker Sanofi-Aventis (NYSE: SNY) is reportedly expected to sweeten its bid for U.S. biotechnology company Genzyme (Nasdaq: GENZ) later this week.

The two companies are said to be negotiating a cash deal worth $74 a share or $19 billion, plus extra payments linked to experimental multiple sclerosis drug Lemtrada. A Wall Street Journal report said the talks have taken longer than anticipated as Sanofi continues to examine the books of Genzyme.
Sanofi is said to be concerned about the past manufacturing problems at Genzyme.

The purchase of Genzyme would give Sanofi access to the growing market of rare diseases and also compensate for revenue losses as patents expire on some of its biggest-selling products.

Genzyme had last year rejected Sanofi's $69 per share or $18.5 billion offer on grounds of undervaluation. Sanofi took the bid directly to shareholders in October and extended the offer until February 15.

The two companies are engaged in discussions regarding a potential Contingent Value Right (CVR), for Lemtrada (alemtuzumab MS) with milestone payments based upon approval and certain sales thresholds. Although those talks have continued and have included commercial teams and executives of both the companies, significant differences remained on the potential CVR and the value of Sanofi's offer.

I have always estimated the transaction would happen between $69 and $75 a share in cash. The CVR should be worth $6 to $8 a share. The operation could be announced the day of Sanofi's results, said a Reuters report quoting Jean-Jacques Le Fur, analyst at Oddo Securities.

Sanofi entered into a confidentiality agreement with Genzyme last week to access to more of Genzyme's financial information.

According to a SEC filing from Genzyme describing the meeting on September 2010 between the two companies’ CEOs, SNY's chief executive Christopher Viehbacher stated that his proposed price range of $69.00-$80.00/share was “manageable”. Viehbacher found the option of walking away from a deal “unacceptable”, given the value of transaction and time spent.

Sanofi is scheduled to announce its fourth quarter results on Wednesday and could announce a deal for Genzyme before that.

SNY closed Friday's regular trading at $34.40, up 0.20 percent, while GENZ closed at $73.40, up 0.19 percent.