Sanofi-Aventis has hit the acquisition trail again and is expanding its consumer healthcare presence by acquiring the USA’s Chattem.
Under the terms of the agreement, the French drugmaker is offering $93.50 per share in cash, or about $1.9 billion, which represents a 34% premium above the closing price of Chattem’s shares on December 18, and 44% more than its six-month average. The deal is valued at $1.9 billion and will create the world’s fifth-largest consumer healthcare company.
For its cash, Sanofi is getting hold of a 130-year-old “leading manufacturer and marketer of branded consumer healthcare products, toiletries and dietary supplements across niche market segments in the USA”. The firm said that Chattem “has regularly demonstrated its ability to sustain regular growth”, noting that while Sanofi’s over-the-counter sales are expected to reach 1.4 billion euros worldwide in 2009, it has “thus far not been directly present” across the Atlantic.
Chief executive Chris Viehbacher said that the acquisition will be a significant milestone in Sanofi’s “ transformation strategy and will provide us with the ideal platform in the US consumer healthcare market, which represents 25% of the current worldwide opportunity”. He added that “our ability to convert prescription medicines to OTC products will be enhanced by Chattem’s leading sales, marketing and distribution channels”.
This ability will be tested out pretty soon as Sanofi also announced that it will seek to convert its former big-selling antihistamine Allegra (fexofenadine HCl) in the USA to an OTC product. Chattem’s chief executive Zan Guerry and the firm’s senior leadership team will head up Sanofi’s US consumer health division once the transaction closes in the first quarter.
The deal is expected to be accretive to Sanofi’s earnings “as early as year one”, and “significant revenue synergies” should be obtained by selling Chattem’s products into geographic areas where the Paris-headquartered firm has a strong presence, particularly in emerging markets.
The Chattem buy is the latest in a number of deals Mr Viehbacher has signed off as he looks to build a group not reliant on branded drugs and finding blockbusters. A number of generics firms have been picked up (Helvepharm of Switzerland, Brazil’s Medley and Mexico’s Laboratorios Kendrick) and closer to home, the French eye disease specialist Fovea was bought. Sanofi also dipped into its coffers and pulled out $4 billion to buy the 50% stake owned by Merck & Co in the companies’ animal health joint venture Merial in July.
