Sanofi, BI to swap businesses

Sanofi to focus on consumer healthcare, BI gains the Merial animal health business.

Sanofi and Boehringer Ingelheim (BI) announced Dec. 15 that the companies have entered into exclusive negotiations to swap businesses.

The proposed transaction would consist of an exchange of Sanofi animal health business — Merial, with an enterprise value of 11.4 billion euros — and BI consumer healthcare (CHC) business with an enterprise value of 6.7 billion euros. (The BI CHC business in China would be excluded from the transaction.) The transaction would also include a gross cash payment from BI to Sanofi of 4.7 billion euros.

The transaction would allow Sanofi to become the number one ranked player in CHC with expected pro forma sales of approximately 5.1 billion euros in 2015 and a global market share close to 4.6%.

The animal health industry is a very attractive industry in terms of innovation, growth potential and profitability. Combining Merial's and BI's complementary strengths would create the second-largest player in the global animal health market with pro forma sales of approximately 3.8 billion euros in 2015 with the ability to compete for global market leadership.

The combined portfolios and technology platforms in anti-parasitics, vaccines and pharmaceutical specialities would place the combined company in the key growth segments of the industry, the companies said. The species portfolios are highly complementary building on Merial’s expertise in companion animals and poultry and BI’s expertise in swine.

Lyon, France, would be a key operational center of BI's Animal Health business. BI will commit to maintain business operations, R&D and Manufacturing Centers in France. As the U.S. market is an important part of Merial’s business, BI would pay particular attention to sustain the momentum of the U.S. operations. Boehringer Ingelheim will give particular attention to social matters as well as skills and retention sensitivities.

The execution of definitive agreements is expected in the coming months following consultations with the relevant social bodies. BI and Sanofi’s goal currently is to close the potential transaction in the fourth quarter 2016, subject to appropriate regulatory approvals.

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