Sept. 22 (Bloomberg) -- Sanofi-Aventis SA, France's biggest drugmaker, sweetened its bid for Zentiva NV to clinch the support of the Czech generic-drug company's board in a deal valued at 1.8 billion euros ($2.6 billion).

Zentiva shareholders will now get 1,150 koruna ($69.71) a share, a 9.5 percent increase on the original bid, Paris-based Sanofi said in a statement today. The improved offer is extended to stock held in the form of global depositary shares. Zentiva's board had urged investors to reject the approach up until now.

Sanofi, which is struggling to get new products on the market as some of its biggest sellers face patent challenges, is replacing Chief Executive Officer Gerard le Fur to spur growth. The French drugmaker wants control of Zentiva so it can expand in a market that is growing at twice the rate of branded medicines. Zentiva, based in Prague, sells copies of brand-name medicines whose patents have expired in Russia, Turkey and Romania, where governments are increasing health-care spending.

Zentiva offers ``a unique opportunity to accelerate its strategy in the markets that Zentiva serves,'' Sanofi said in the statement. The Czech drugmaker ``will become a platform for Sanofi-Aventis's further growth in the central and eastern European markets, focused on providing affordable pharmaceuticals to patients in this region.''

Earnings

Sanofi's original bid was lower than other takeover offers for regional peers, Zentiva said in July. When including earnings from Eczacibasi, the Turkish drugmaker acquired in 2007, the offer valued Zentiva at 13.8 times earnings before interest, tax, depreciation and amortization. That compared with a median offer of 14.7 times Ebitda for similar takeovers in eastern Europe.

Sanofi's acquisition of a 24.9 percent stake in Zentiva in March 2006 valued the Czech company at 15.3 times Ebitda, according to data compiled by Bloomberg.

The French drugmaker's first offer topped an approach from PPF Group NV, the Czech Republic's largest closely held investment group. PPF, which holds 19 percent of Zentiva's voting rights, later withdrew its 950 koruna-a-share offer.

PPF has no comment to make for now on Sanofi's improved bid, spokesman Jiri Hajek said by phone today.

Sales of Generics

Sales of generics, lower-priced copies of brand-name medicines that have lost patent protection, will probably rise 14 to 15 percent this year to as much as $74 billion in the world's eight largest markets, according to the research company IMS Health Inc. of Norwalk, Connecticut. Increasing competition has prompted companies to consolidate and expand in emerging markets.

Teva Pharmaceautical Industries Ltd., the world's largest generic-drug maker, is buying Barr Pharmaceutials Inc. for $7.46 billion to add markets in Eastern Europe.

Mylan Inc., the largest U.S. maker of generic drugs, outbid Teva to buy Merck KGaA's generics unit last year for $6.9 billion. Tokyo's Daiichi Sankyo Co. agreed June 11 to buy a controlling stake in Indian generics maker Ranbaxy Laboratories Ltd. for $4.6 billion.

To contact the reporter on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net

Last Updated: September 22, 2008 03:14 EDT