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Sanofi and Boehringer Ingelheim sign definitive agreements to swap businesses

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Sanofi’s animal health business will go to Boehringer Ingelheim while the latter’s consumer healthcare business will be integrated with the former

Sanofi and Boehringer Ingelheim have 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 transaction is expected to be cloased 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. This transaction will be a significant business swap in the pharma sector.

Prof Dr Andreas Barner, Chairman of the Board of Boehringer Ingelheim, said, “This is a win for Boehringer Ingelheim and Sanofi alike. Moreover, it is one of the most significant steps in our corporate history. It demonstrates the consistent orientation of our business towards innovation-driven sectors. As a research based pharma company, we will substantially enhance our position in the future market for Animal Health and will prospectively be one of the largest global players in this segment. The similarity in culture and approaches of BI and Sanofi will ensure that the businesses acquired by the other partner will develop well in the future.”

Olivier Brandicourt, Chief Executive Officer, Sanofi, said, “In signing these contracts, we are meeting one of the key strategic goals of our roadmap 2020, namely to become a leader in consumer healthcare and a leading diversified global human healthcare company. This business swap will bring a complementary portfolio to our consumer healthcare activity with highly recognised brands, allowing for mid and long term value creation, and enhancement of our market penetration in some major countries.”

The strategic swap lays the foundation for both companies to reach size and scale in two highly attractive pharma activities. Upon successful completion, Boehringer Ingelheim’s CHC business – with an enterprise value of €6.7 billion – would be transferred to Sanofi and Sanofi’s Merial – with an enterprise value of €11.4 billion – would be transferred to Boehringer Ingelheim. The transaction includes a cash payment to Sanofi of €4.7 billion 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.

Combining Merial and Boehringer Ingelheim’s complementary portfolios and technology platforms in anti-parasitics, vaccines and pharma specialties is expected to put the combined company into a more competitive position in the key growth segments of the industry. The Boehringer Ingelheim Animal Health business would more than double its sales to approximately €3.8 billion 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 billion based upon 2015 global sales.

Hubertus von Baumbach, designated Chairman of the Board of Boehringer Ingelheim, stated, “We know as well as Sanofi does that it is due to our employees, their commitment and their excellent performance that this business exchange is attractive for both sides. Therefore, Boehringer Ingelheim and Sanofi are committed to drive these businesses successfully and sustainably in the future.”

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