Date: 2016-06-27
Type of information: Company acquisition
Acquired company: Merial (France)
Acquiring company: Boehringer Ingelheim (Germany)
Amount: €4.7 billion
Terms: * On January 2, 2017, Sanofi and Boehringer Ingelheim confirmed that the strategic transaction signed in June 2016, which consists of an exchange of Sanofi’s animal health business (Merial) and Boehringer Ingelheim’s consumer healthcare (CHC) business, has been successfully closed in most markets on January 1st 2017. This closing marks the successful outcome of the business swap which started with exclusive negotiations 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 early 2017. * On June 27, 2016, Sanofi and Boehringer Ingelheim announced the signing of contracts to secure the strategic transaction initiated in December 2015 which consists of an exchange of Sanofi’s animal health business, Merial, and Boehringer Ingelheim’s consumer healthcare (CHC) business. This step marks a major milestone before closing of the transaction which is expected 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 successful completion, Boehringer Ingelheim’s CHC business - with an enterprise value of €6.7 bn - would be transferred to Sanofi and Sanofi’s Merial – with an enterprise value of €11.4 bn - would be transferred to Boehringer Ingelheim. The transaction includes a cash payment to Sanofi of €4.7 bn 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. With this transaction, Sanofi would integrate Boehringer Ingelheim’s CHC business in all countries except China. Joint CHC sales would amount to approx. €4.9 bn2 based upon 2015 global sales. Thanks to the addition of a highly complementary product and brand portfolio, Sanofi would enhance its position in several of its strategic categories – Pain Care, Allergy Solutions, Cough & Cold Care, Feminine Care, Digestive Health and Vitamins, Minerals and Supplements. * On June 27, 2016, Sanofi and Boehringer Ingelheim announced the signing of contracts to secure the strategic transaction initiated in December 2015 which consists of an exchange of Sanofi’s animal health business (Merial) and Boehringer Ingelheim’s consumer healthcare (CHC) business. This step marks a major milestone before closing of the transaction which is expected by year-end 2016 and remains subject to approval by all regulatory authorities in different territories. The integration of Boehringer Ingelheim’s Consumer Healthcare business into Sanofi and Merial into Boehringer Ingelheim would start after closing. Upon successful completion, Boehringer Ingelheim’s CHC business – with an enterprise value of €6.7 bn – would be transferred to Sanofi and Sanofi’s Merial – with an enterprise value of €11.4 bn – would be transferred to Boehringer Ingelheim. The transaction includes a cash payment to Sanofi of €4.7 bn 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. Sanofi and Boehringer Ingelheim agreed that Lyon (France) and Toulouse (France) would be key operational centers of Boehringer Ingelheim’s Animal Health business, including business operations, R&D and manufacturing facilities in Lyon and the production site in Toulouse. As the U.S. market is an important part of Merial’s business, Boehringer Ingelheim would pay particular attention to sustain the momentum of the U.S. operations. Germany would be a key center of Sanofi’s CHC business, including in particular gastro-intestinal and cough & cold categories that will benefit from the strong capabilities of current Boehringer Ingelheim teams. * On December 15, 2015, Sanofi and Boehringer Ingelheim announced that the companies 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 execution of definitive agreements is expected in the coming months following consultations with the relevant social bodies. Boehringer Ingelheim and Sanofi's goal currently is to close the potential transaction in Q4 2016, subject to appropriate regulatory approvals. Sanofi intends to use a portion of the net proceeds of the transaction to repurchase shares. Taking into account the anticipated CHC results, share buybacks and potential synergies, the overall transaction is expected to be business EPS neutral in 2017 and accretive in subsequent years.
Over the last months, Sanofi and Boehringer Ingelheim have diligently prepared for the integration of the businesses and employees as of the first day under new ownership. In the interest of all customers and to ensure uninterrupted business continuity, it is both companies’ priority to achieve a smooth integration of the transferred businesses.
The Boehringer Ingelheim Animal Health business would more than double its sales to approx. €3.8 bn based upon 2015 global sales.
Details: 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 bn in 2015. 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. Lyon would be a key operational center of Boehringer Ingelheim's Animal Health business. Boehringer Ingelheim will commit to maintain business operations, R&D and Manufacturing Centers in France. As the U.S. market is an important part of Merial's business, Boehringer Ingelheim would pay particular attention to sustain the momentum of the U.S. operations. Boehringer Ingelheim will give particular attention to social matters as well as skills and retention sensitivities. Merial employs 6,600 people and operates in more than 150 countries worldwide with €2.5 billion of sales expected in 2015. The company has three main business areas: pets, farm animals, and veterinary public health. The main Merial brands in the field of pet health include Frontline®, Heartgard®, NexGard® and Purevax®; and in farm animals Vaxxitek®, Eprinex®, Ivomec®, Longrange®, Circovac® and GastroGard®. With this transaction, Sanofi would integrate Boehringer Ingelheim’s consumer healthcare business in all countries except China. Joint consumer healthcare sales would amount to approx. €4.9 bn based upon 2015 global sales.
Related: Veterinary medicine
