Genzyme Corp, which is being courted by Sanofi-Aventis, has agreed to sell its genetic-testing business to Laboratory Corp of America Holdings for $925 million in cash.
Under the terms of the agreement, which LabCorp says, has a net cash cost of about $795 million the latter will purchase Genzyme Genetics "in its entirety, including all testing services, technology, intellectual property rights, and its nine testing laboratories". It has also committed to offer employment to the unit’s 1,900 workers, "including senior management".
Genzyme chief executive Henri Termeer said the deal demonstrates the strategic value of the unit, which had revenues last year of $371 million, "and the strong franchise we’ve built over a 20-year period.” He added that "it also shows how our management team is uniquely positioned to unlock the underappreciated value of Genzyme’s diverse businesses for shareholders".
The sale comes weeks after Mr Termeer and the board rejected an $18.50 billion takeover offer from Sanofi, saying the French drugmaker's bid was opportunistic. The deal with LabCorp is likely to please shareholders at a time when some observers believe Sanofi will go hostile with its offer.
The sale of Genzyme Genetics concludes one of a three-part divestiture of non-core operations that the company announced in May. Plans to divest two other business units, diagnostic products and pharmaceutical intermediates, "remain on track", Genzyme said, and the proceeds may be used to finance the second half of a $2 billion stock buyback, to be completed by May 2011.
1,000 jobs to go?
News of the sell-off come days after Mr Termeer said that job cuts were being planned at the company. No figures were given but reports have circulated that there will be a 10% reduction in the workforce, or about 1,000 positions, over the next 15 months.