Sanofi and Boehringer Ingelheim sign contract to $25bn business swap

27 June 2016 (Last Updated June 27th, 2016 18:30)

French drug maker Sanofi and German-based Boehringer Ingelheim have signed contracts in a bid to secure the strategic transaction that includes an exchange of Sanofi’s animal health business Merial and Boehringer’s consumer healthcare (CHC) business.

chart

French drug maker Sanofi and German-based Boehringer Ingelheim have signed contracts in a bid to secure the strategic transaction that includes an exchange of Sanofi's animal health business Merial and Boehringer's consumer healthcare (CHC) business.

The merger of Sanofi's Merial business, with an enterprise value of €11.4bn into Boehringer Ingelheim and Boehringer's CHC business, with an enterprise value of €6.7bn into Sanofi, will only begin after the closing of the transaction.

The transaction includes a cash payment of €4.7bn to the French pharmaceutical company in order to reflect the difference in value of the two businesses.

The business swap will help combine Merial and Boehringer Ingelheim's complementary portfolios, as well as technology platforms in anti-parasitics, vaccines and pharmaceutical specialties.

Boehringer Ingelheim Board chairman Andreas Barner said: "As a research based pharmaceutical company, we will substantially enhance our position in the future market for Animal Health and will prospectively be one of the largest global players in this segment.

"The similarity in culture and approaches of Boehringer Ingelheim (BI) and Sanofi will ensure that the businesses acquired by the other partner will develop well in the future."

With the transaction, Boehringer Ingelheim Animal Health business will be able to more than double its sales to nearly €3.8bn based upon the global sales last year.

" … We will substantially enhance our position in the future market for Animal Health and will prospectively be one of the largest global players in this segment."

Sanofi will be able to integrate Boehringer Ingelheim's CHC business across all countries worldwide excluding China, thereby increasing the sales to approximately €4.9bn based on 2015 global sales.

Sanofi CEO Dr Olivier Brandicourt said: "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 deal would also allow Sanofi to improve its business in several of its strategic categories, which are cough and cold care, feminine care, pain care, allergy solutions, digestive health and vitamins, and minerals and supplements.

The closing of the transaction is expected by the end of this year and is subject to approval by all regulatory authorities across several territories.


Image: Sanofi's Animal Health business to swap with Boehringer's consumer healthcare businesses. Photo: courtesy of Business Wire.