Sanofi, Boehringer Ingelheim in business swap negotiations

PARIS and INGELHEIM, Germany — Sanofi and Boehringer Ingelheim announced Tuesday that they were in negotiations to swap businesses. The swap would involve Sanofi’s animal health division, Merial, worth about $12.4 billion and Boehringer Ingelheim’s consumer healthcare business, valued at about $7.3 billion. 

 

A deal — which would exclude Boehringer Ingelheim’s consumer healthcare business in China — would also see Sanofi receiving a $5.2 billion payment from Boehringer Ingelheim and make Sanofi one of the top over-the-counter product companies in the world.

 

“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,” Sanofi CEO Dr. Oliver Brandicourt said. “I am confident that Boehringer Ingelheim will enable Merial to fully express and develop its potential in the attractive but competitive animal health market.”

 

The companies said that a business swap would give Sanofi critical mass in cough and cold, while bringing products in such categories as gastrointestinal, VMS, analgesics and antispasmodics into Sanofi’s portfolio and improving the company’s reach in Germany and Japan. It would also expand Sanofi’s position in the United States, Europe, Latin America and Eurasia, with Germany becoming a key area for Sanofi’s cough and cold and gastrointestinal products. 

 

“I am confident that Sanofi will enable our CHC business to fully live its potential supported by highly professional and committed teams,” Boehringer Ingelheim chairman Andreas Barner said.

 

A deal would also improve Boehringer Ingelheim’s position in animal health, making it the second-largest player in the world for that area. It would maintain Merial operations in France and look for momentum in U.S. operations.

 

A definitive agreement between the companies is expected in the coming months, and Sanofi’s goal is to close a potential transaction in Q4 of 2016. Were a deal to take place, it would not affect Sanofi’s EPS in 2017 and would be accretive thereafter.