Sanofi, Boehringer trade business units in $25 billion swap
- Sanofi and the private Boehringer Ingelheim have agreed to a €22.8 billion (roughly $25 billion) asset swap in which the French drugmaker will trade its Merial animal-health unit for Boehringer's consumer healthcare business.
- Boehringer will also pay Sanofi €4.7 billion in cash to reflect the difference in value between the two assets.
- Exclusive negotiations between the two companies began in December 2015 and went "according to plan," the companies said in a statement Monday. The deal is expected to close by the end of year.
With the swap, Sanofi significantly bolsters its consumer healthcare business, adding a business line which generated just over €1.5 billion euros in sales last year for Boehringer.
Sanofi already markets several big-name consumer brands, such as the allergy meds Allegra and Nasacort as well as the pain drug Doliprane. The French drugmaker will add Boehringer's antispasmodic Buscopan, the laxative Dulcolax, and cough treatment Mucosolvan, among other brands.
Including Boehringer's assets, Sanofi expects to control 4.3% of the consumer healthcare market based on the combined sales of $4.9 billion for both businesses.
"This business swap will bring a complementary portfolio to our consumer healthcare activity with highly recognized brands, allowing for mid and long term value creation, and enhancement of our market penetration in some major countries," said Sanofi CEO Olivier Brandicourt.
Sanofi expects the swap to be accretive to earnings per share beginning in 2017 and will integrate Boehringer's consumer healthcare business in all regions except in China.
Boehringer, on the other hand, gains Sanofi's Merial unit, which has an enterprise value of €11.4 billion euros.
"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," said Andreas Barner, Chairman of the Board of Boehringer.
Animal health is a significant part of Boehringer's business, with current sales of existing products representing 9% of 2015 revenue. Adding Merial will nearly triple the size of Boehringer's animal-health unit, which will command an estimated 14.3% of the global animal-health business after closing.
Sanofi has build Merial around three main areas: pets, farm animals, and veterinary public health. Established brands include the pet meds Frontline and Heartgard.
Boehringer said it would center business operations, R&D, and manufacturing at existing facilities in Lyon, France and Toulouse, France.
The asset swap comes as Sanofi is hot in pursuit of the U.S.-based Medivation, which co-markets the blockbuster cancer drug Xtandi. Medivation has rebuffed Sanofi's $9.3 billion offer and defended itself against Sanofi's attempts to replace Medivation's board.
Sanofi has already named eight of its own candidates and hopes to win over Medivation's shareholders in a vote to take place later this summer.
Follow Ned Pagliarulo on Twitter