July 15, 2016

Sanofi to transfer Merial to Boehringer Ingelheim's hands



Sanofi and Boehringer Ingelheim has announced in late June the signing of contracts to secure a strategic transaction initiated in December 2015.


The development consists of an exchange of Merial - Sanofi's animal health business, and Boehringer Ingelheim's consumer healthcare business. The transaction is expected to conclude by year-end 2016 and remains subject to approval by all regulatory authorities in different territories. The integration of Boehringer Ingelheim's Consumer Healthcare (CHC) business into Sanofi and Merial into Boehringer Ingelheim would start after closing.


Upon the close of the transaction, it will be a significant business swap in the pharmaceutical sector as well as an important event in the history of both companies.


The similarity in culture and approaches of Boehringer Ingelheim and Sanofi will ensure that the businesses acquired by the other partner will develop well in the future, Merial says.


"In signing these contracts, we are meeting one of the key strategic goals of our roadmap 2020, namely to become a leader in consumer healthcare and a leading diversified global human healthcare company," Olivier Brandicourt, CEO of Sanofi, commented. "This business swap will bring a complementary portfolio to our consumer healthcare activity with highly recognised brands, allowing for mid and long term value creation, and enhancement of our market penetration in some major countries."


The exchange lays the foundation for both companies to reach size and scale in two highly attractive pharmaceutical activities. Boehringer Ingelheim's CHC business has an enterprise value of EUR6.7 billion (US$7.5 billion) while that of Sanofi's Merial is worth EUR11.4 billion (US$13 billion). The transaction between the companies includes a cash payment to Sanofi of EUR4.7 billion (US$5.2 billion) to reflect the difference in value of the two businesses.


Taking into account the expected contribution from the acquired CHC business, progressive implementation of synergies and the use of part of the net proceeds to buy shares back, Sanofi expects the overall transaction to be business EPS neutral in 2017 and accretive afterwards.


The Boehringer Ingelheim Animal Health business would more than double its sales to approximately EUR3.8 billion (US$4.2 billion) based upon 2015 global sales.


In the meantime, with the transaction, Sanofi would integrate Boehringer Ingelheim's CHC business in all countries except China. Joint CHC sales would amount to approximately EUR4.9 billion (US$5.4 billion) based upon 2015 global sales.


As the US market is an important part of Merial's business, Boehringer Ingelheim would pay particular attention to sustain the momentum of US operations. Germany would be a key center of Sanofi's CHC business, including in particular gastro-intestinal, and cough and cold categories that will benefit from the strong capabilities of current Boehringer Ingelheim teams.


- Merial

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