Mergers and Acquisitions

Date: 2016-06-27

Type of information: Pipeline acquisition

Acquired company: Boehringer Ingelheim consumer healthcare business (Germany)

Acquiring company: Sanofi (France)

Amount:

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.
 The Boehringer Ingelheim Animal Health business would more than double its sales to approx. €3.8 bn based upon 2015 global sales. 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 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.

Details:

The transaction would allow Sanofi to become the number one ranked player in consumer healthcare with expected pro forma sales of approximately €5.1 billion in 2015 and a global market share close to 4.6%1. Sales of Boehringer Ingelheim  billion business (excluding China) are estimated at about €1.6  billion for 2015 and are highly complementary with those of Sanofi consumer healthcare, both in terms of products and geographies. Boehringer Ingelheim consumer healthcare would improve the position of Sanofi in Germany and Japan where Sanofi consumer healthcare 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 & Cold. Sanofi consumer healthcare  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.

Germany would become a key center of Sanofi consumer healthcare business, including in particular for Gastro-Intestinal and Cough & 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 Consumer Healthcare is the 8th largest Consumer Healthcare business in the world. Sales of Boehringer Ingelheim's CHC business were €1.4 billion in 2014, contributing 11 per cent to Boehringer Ingelheim's net sales. It aims to create and drive inspiring and sustainable solutions that will efficiently develop compelling and true global brands for consumers.The leading brands of Boehringer Ingelheim's CHC business are the antispasmodic Buscopan® (2014 sales of €219 million; mainly sold in Europe and Latin America), the laxative Dulcolax® (2014 sales of €204 million; sold in more than 40 countries with a strong presence in the U.S.), the multivitamins Pharmaton® (2014 sales of €133 million, with majority of sales in Latin America), the cough treatments Mucosolvan® (2014 sales of €165 million, mainly in China, Germany and Russia) and Bisolvon® (2014 sales of €101 million with a fragmented worldwide presence with largest countries being Spain and Italy) and the cold treatment Mucoangin®/Lysopaine® (2014 sales of €48 million).

Sales of Sanofi CHC business were €3.3 billion in 2014. The leading brands of Sanofi's CHC business are the allergy products Allegra® (2014 sales of €350 million) and Nasacort® (2014 sales of €114 million), the pain killers Doliprane® (2014 sales of €310 million), No-Spa® (2014 sales of €109 million) and Dorflex® (2014 sales of €90 million), the digestive products Essentiale® (2014 sales of €235 million), Enterogermina® (2014 sales of €156 million) and Maalox® (2014 sales of €98 million), the feminine care product Lactacyd® (2014 sales of €104 million) and the vitamins, minerals and supplements Magné B6® (2014 sales of €88 million). In 2014, 52.6% of CHC sales were generated in emerging markets, 21.2% in the U.S. and 20.3% in Western Europe.

Sanofi and Boehringer Ingelheim combined worldwide CHC businesses - Priority Categories (pro forma)

Source: Nicholas Hall & Company, FY 2014

*As per Sanofi definition

Related:

consumer healthcare

Is general: Yes