Sanofi, BI Close on Multi-Billion Dollar Business Swap

Sanofi and Boehringer Ingelheim (BI) have closed on their previously announced multi-billion dollar business-swap transaction signed in June 2016 in most markets on January 1, 2017. The transaction consists of an exchange of Sanofi’s animal health business (Merial) and BI’s consumer healthcare (CHC) business.The companies had first announced their intent for the transaction in December 2015. 

The closing of the acquisition of Merial in Mexico and the Merial and CHC swap in India have been delayed pending receipt of certain regulatory approvals, but both are expected to close in early 2017.

Alan Main, executive vice president, consumer healthcare and member of Sanofi’s executive committee, will lead Sanofi’s CHC business, including the former BI CHC brands. The BI animal health business unit will be headed by Dr. Joachim Hasenmaier, who will remain as member of the BI Board of Managing Directors.

BI’s CHC business has an enterprise value of EUR 6.7 billion ($7.0 billion) and Sanofi’s Merial business has an enterprise value of EUR 11.4 billion ($11.9 billion). The transaction included a cash payment to Sanofi of EUR 4.7 billion ($4.9 billion) to reflect the difference in value of the two businesses. Taking into account the expected contribution from the acquired CHC business, implementation of synergies, and the use of part of the net proceeds to buy shares back, Sanofi expects that the overall transaction will be neutral on an earnings-per-share basis in 2017 and accretive afterwards.

Sanofi will integrate BI’s CHC business in all countries except China. Joint CHC sales (excluding Venezuela) would amount to approximately EUR 4.9 billion ($5.1 billion) based upon 2015 global sales. Sanofi’s position in several strategic categories is strengthened with the completion of the transaction, including in the areas of pain care, allergy solutions, cough and cold care, feminine care, digestive health, and vitamins, minerals, and supplements.

As part of the closing requirements, BI was required by the US Federal Trade Commission (FTC) and the European Commission (EC) to divest certain animal health assets. In December 2016, the FTC required BI to divest five types of animal health products: canine vaccines, feline vaccines, rabies vaccines, and products to prevent and control outbreaks of cattle parasites and sheep parasites. BI will divest the companion animal vaccines to Eli Lilly and Company and Lilly’s Elanco Animal Health division and the parasite control products to Bayer AG.

For EC regulatory approval, BI agreed in October 2016 to divest certain portfolio animal health assets of the Merial business to Ceva Santé Animale , an animal-health company headquartered in Libourne, France. Ceva will acquire certain animal health vaccines and pharmaceuticals from the Merial portfolio for swine, bovine, and companion animals as well as related intellectual property, manufacturing processes, and research and development activities.

Ceva’s acquisition includes the brands Circovac (excluding US), Progressis, Mucosiffa, Parvovax, Parvoruvax, Equioxx (excluding US), Genixine, Ketofen 1% injection and tablets (excluding Canada) and Ketofen 10% injection (excluding Canada). The divestiture does not include the transfer of a manufacturing site but will be implemented by means of a transfer of all relevant assets.

Merial and BI’s current animal-health portfolio combined more than doubles BI’s animal health business to approximately EUR 3.8 billion ($4.0 billion) based upon 2015 global sales.

Source: Sanofi and US Federal Trade Commission

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