Sanofi and Boehringer Ingelheim have entered into exclusive negotiations to swap businesses. The proposed transaction would consist of an exchange of Sanofi animal health business (Merial) with an enterprise value of €11.4 billion and Boehringer Ingelheim consumer healthcare (CHC) business with an enterprise value of €6.7 billion. Boehringer Ingelheim CHC business in China would be excluded from the transaction. The transaction would also include a gross cash payment from Boehringer Ingelheim to Sanofi of €4.7 billion.
The transaction would allow Sanofi to become the number one ranked player in CHC with expected pro forma sales of approximately €5.1 billion in 2015 and a global market share close to 4.6 per cent. Sales of Boehringer Ingelheim CHC business (excluding China) are estimated at about €1.6 billion for 2015 and are highly complementary with those of Sanofi CHC, both in terms of products and geographies. Boehringer Ingelheim CHC would improve the position of Sanofi in Germany and Japan where Sanofi CHC presence is limited, and expand Sanofi presence in its priority categories. Sanofi would gain access to iconic brands in antispasmodics, gastrointestinal, VMS and analgesics, and attain critical mass in cough and cold. Sanofi CHC business in the US, Europe, Latin America and Eurasia would also expand significantly, giving it multiple leadership postions in key countries and/or on key product categories.
The animal health industry is a very attractive industry in terms of innovation, growth potential and profitability. Combining Merial's and Boehringer Ingelheim's complementary strengths would create the second largest player in the global animal health market with pro forma sales of approximately €3.8 billion in 2015 with the ability to compete for global market leadership. The combined portfolios and technology platforms in anti-parasitics, vaccines and pharmaceutical specialities would place the combined company in the key growth segments of the industry. The species portfolios are highly complementary building on Merial's expertise in companion animals and poultry and BI's expertise in swine.
"In entering into exclusive negotiations with Boehringer Ingelheim, we have acted swiftly to meet one of the key strategic objectives of our roadmap 2020, namely to build competitive positions in areas where we can achieve leadership. This transaction would allow Sanofi to become a world leader in the attractive non-prescription medicines market and would bring a complementary portfolio with highly recognized brands, allowing for mid and long term value creation," said Olivier Brandicourt, M.D., chief executive officer, Sanofi. "I am confident that Boehringer Ingelheim will enable Merial to fully express and develop its potential in the attractive but competitive animal health market."
Germany would become a key centre of Sanofi CHC business, including in particular for gastro-intestinal and cough and cold categories that will benefit from the strong capabilities of Boehringer Ingelheim teams. Sanofi will pay particular attention to social matters as well as skills and people retention sensitivities.
"Boehringer Ingelheim's strategic priority is to focus on the company's core areas of expertise and businesses with an established global scale, or where a pathway to a global scale can be achieved and prioritized among Boehringer Ingelheim's portfolio opportunities," said Prof. Dr Andreas Barner, chairman of the Board, Boehringer Ingelheim.
