Sanofi and Boehringer Ingelheim in talks over asset swap

Move would turn Sanofi into leading player in consumer healthcare and Boehringer Ingelheim into second-largest animal health company

Olivier Brandicourt: 'This transaction would allow Sanofi to become a world leader in the attractive non-prescription medicines market'

French drugmaker Sanofi and Germany's Boehringer Ingelheim are in exclusive negotiations to swap certain parts of their businesses in a move that would turn Sanofi into a leading player in consumer healthcare while Boehringer Ingelheim would become the second-largest company in animal health.

Under the agreement, Sanofi would swap its Merial animal health business, which is valued at 11.4bn, with Boehringer Ingelheim's consumer healthcare business, which has an enterprise value of 6.7bn. The German company would also pay Sanofi 4.7bn in cash.

Boehringer Ingelheim's consumer healthcare business in China would be excluded from the deal.

Sanofi said the business exchange would allow it to become the leading global player in consumer healthcare with sales of around 5.1bn and a market share of almost 4.6%.

The addition of the Boehringer Ingelheim business would improve the position of Sanofi in Germany and Japan, while also giving it 'critical mass' in products for coughs and colds. The deal would also help Sanofi expand its consumer healthcare business in the US, Europe, Latin America and Eurasia, the firm said.

By combining with Sanofi's Merial animal health business, Boehringer Ingelheim said it would become the second-largest player in the global animal health market with sales of around 3.8bn.

In entering into exclusive negotiations with Boehringer Ingelheim, we have acted swiftly to meet one of the key strategic objectives of our roadmap 2020

Olivier Brandicourt, Chief Executive of Sanofi, said: '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 recognised brands, allowing for mid and long term value creation. I am confident that Boehringer Ingelheim will enable Merial to fully express and develop its potential in the attractive but competitive animal health market.'

Andreas Barner, Chairman of Boehringer Ingelheim, said: 'Boehringer Ingelheim Animal Health is and will stay strongly committed to bringing novel, innovation driven solutions to veterinarians and animal owners. Our combined Animal Health business would be well positioned for growth and emergence as a leader globally. I am confident that Sanofi will enable our CHC business to fully live its potential supported by highly professional and committed teams.'

The two firms aim to close the potential transaction in Q4 2016, subject to appropriate regulatory approvals.

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