Sanofi and Boehringer Ingelheim are in exclusive negotiations to swap respective animal health and consumer healthcare businesses.
The companies are proposing to exchange Sanofi’s Merial unit, which has an enterprise value of some 11.4 billion euros, with Boehringer Ingelheim’s consumer healthcare (CHC) business (excluding that in China), worth 6.7 billion euros.
Under the deal, Boehringer would also make a gross cash payment to Sanofi of 4.7 billion euros, which said it would use net proceeds from the transaction to buy back shares.
The move will allow Sanofi to become the number one ranked player in CHC with expected pro forma sales of around 5.1 billion euros in 2015 and a global market share close to 4.6%. Sales of Boehringer’s CHC business (excluding China) are estimated at about 1.6 billion euros for 2015 and are highly complementary with those of Sanofi CHC, both in terms of products and geographies, the firms noted.
Combining Merial’s and Boehringer’s complementary strengths would create the second largest player in the global animal health market with pro forma sales of around 3.8 billion euros in 2015, and offers the ability to compete for global market leadership. The species portfolios are highly complementary, building on Merial’s expertise in companion animals and poultry and BI’s expertise in swine, the companies said.
“In entering into exclusive negotiations with Boehringer Ingelheim, we have acted swiftly to meet one of the key strategic objectives of our roadmap 2020, namely to build competitive positions in areas where we can achieve leadership,” noted Sanofi’s chief executive Olivier Brandicourt, explaining his group’s interest in the deal.
Boehringer said it’s strategic priority is to focus on core areas of expertise and businesses with an established global scale, or where a pathway to a global scale can be achieved. “Our combined Animal Health business would be well positioned for growth and emergence as a leader globally,” said BI chairman Andreas Barner.
Boehringer and Sanofi’s are hoping to close the potential transaction in the fourth quarter of next year, subject to appropriate regulatory approvals.