Sanofi to buy Boehringer Ingelheim’s consumer healthcare business

Sanofi and Boehringer Ingelheim 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 £8.3bn (€11.4bn) and Boehringer Ingelheim consumer healthcare (CHC) business with an enterprise value of £4.8bn (€6.7bn).

The transaction would also include a gross cash payment from Boehringer Ingelheim to Sanofi of  £3.4bn (€4.7bn).

The transaction would give Sanofi pro forma sales of approximately £3.7bn (€5.1bn) in 2015 and a global market share close to 4.6% according to Sanofi.

Sales of Boehringer Ingelheim CHC business (excluding China) are estimated at about £1.1bn (€1.6bn) for 2015.

Olivier Brandicourt, chief executive officer, 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.”

The execution of definitive agreements is expected in the coming months following consultations with the relevant social bodies.

Boehringer Ingelheim and Sanofi's say their current goal 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.