Apparently CVRs are a useful tool in bridging the gap between an acquirer and an soon-to-be-acquired, but are not all-seeing and all-powerful. Sanofi and Genzyme are getting closer to setting a value for their deal, but valuing the CVRs themsleves is still complex so there are no guarantees.
As posted yesterday, Sanofi most likely will need to sweeten the cash component in this deal - raising its bid to $71-$72 per share from its current $69. And the CVR likely will add an additional $5-$6 per share when all is said and done.
This post points out, however, that CVRs can later be challenged in court -- most often by investors who believe the milestone terms have been manipulated. So there is still some reason for the two negotiating parties to be somewhat cautious as they proceed. And, Sanofi has yet to do any due diligence with Genzyme's books.
Posted by Bruce Lehr Jan 15th 2011.