March 9, 2010

Sanofi-aventis and Merck to create a global leader in animal health

The new joint venture will be equally-owned by Merck and Sanofi-aventis. The formation of this new animal health joint venture is subject to execution of final agreements, antitrust review in the US, Europe and other countries and other customary closing conditions. The completion of the transaction is expected to occur in approximately the next 12 months.

"The upcoming combination of Merial and Intervet/Schering-Plough is an exciting opportunity for Sanofi-aventis to create with Merck a leading company in the Animal Health strategic and growing sector", said Christopher A. Viehbacher, chief executive officer of Sanofi-aventis.

"I am convinced that, together, we will create strong value in bringing broader and improved offerings in both pet and production animal segments.  This transaction represents another consistent milestone in our diversification strategy to bring sustainable growth to Sanofi-aventis," Viehbacher said.

Richard T. Clark, Merck Chairman, President and CEO said, "This new joint venture delivers on Merck's commitment to customer focus by creating one of the broadest portfolios of animal health products and services in pharmaceuticals and biologics. The planned joint venture will have an attractive geographical network of global technology and expertise to provide health solutions based on customers' needs, which often vary regionally."

The entreprise value of Merial has been fixed at US$8 billion and the entreprise value of Intervet/Schering-Plough at US$8.5 billion, leading to a true-up payment of US$250 million to Merck to establish a 50-50 joint venture.  An additional amount of US$750 million will be paid by Sanofi-aventis, as per the terms of the agreement signed on July 29, 2009.

This new joint venture will offer a broader portfolio of animal health products and services in pharmaceuticals and biologics, as well as the ability to capitalise on growth opportunities in all fields and countries around the world.

The worldwide animal health market reached US$19 billion in 2008. Products for companion animals accounted for 40% of total sales while products for production animals accounted for the remaining 60% of total sales. This market is expected to grow at around 5% per year over the next five years, driven by a growing demand for animal proteins, as well as a strong consumer needs for companion animal health care.

The companies said that both Merial and Intervet/Schering-Plough will continue to operate independently until the closing of the transaction.