Boehringer in exclusive talks to acquire Merial Animal Health

Veterinary medicines manufacturer Boehringer Ingelheim (BI) is exclusive talks with the pharmaceutical giant Sanofi to acquire the latter’s animal health division Merial.

The two multinationals are proposing to swap Boehringer’s consumer healthcare assets ( generating 11% of its annual revenues) for Sanofi’s animal health interests, in a deal that would make Boehringer the world’s second largest animal health  business behind Zoetis, with Sanofi becoming the global leader in consumer healthcare.  The process is expected to complete by Q4 2016, subject the appropriate regulatory approvals.

The proposed transaction would exchange Merial, valued at €11.4 billion, for Boehringer’s consumer healthcare (CHC) business with an enterprise value of €6.7bn plus a gross cash payment of €4.7bn. The BI CHC business in China would be excluded from the deal.

The combined Merial and BI global animal health businesses would have pro forma annual revenues of € 3.8bn based on 2015 figures, with the ability to compete for global market leadership.  Merial’s annual sales are around €2.5bn and BI’s €1.15bn. The companies say the merged portfolios and technology platforms in veterinary antiparasitics, vaccines and pharmaceuticals are in key growth segments of the animal health industry, while the species portfolios are highly complementary, combining Merial's expertise in companion animals and poultry with BI’s strength in swine.

The merged operations would top the global animal health industry in pig products, small animals and horses, with the third position in poultry and fourth in ruminants.

 Boehringer, based in Ingelheim, Germany, states that Merial’s headquarters in the French city of Lyon would become a key operational center of the BI animal health business. It would commit to maintaining business operations, R&D and manufacturing centres in France, as well as paying particular attention to sustaining the momentum of Merial’s US operations.

Merial has 13 R&D centres and 18 production sites around the world, including a vaccine plant at the Pirbright campus in the UK. While most of Boehringer’s animal health R&D and manufacturing infrastructure is located in the Kansas Animal Health Corridor in the US, it has made significant recent investments in Hannover, Germany and is growing its presence in China.

The Merial farm animal portfolio includes the Vaxxitek, Eprinex, Ivomec, Longrange, Circovac and GastroGard brands, with the company acting as a strategic partner for veterinary public health, providing governments with vaccines to control foot and mouth disease, rabies and the bluetongue virus. The main BI brands comprise Circoflex, Metacam, Ingelvac PRRS, Duramune and Vetmedin. 

 Boehringer, based in Ingelheim, Germany, states that Merial’s headquarters in the French city of Lyon would become a key operational center of the BI animal health business. It would commit to maintaining business operations, R&D and manufacturing centres in France, as well as paying particular attention to sustaining the momentum of Merial’s US operations.

"Boehringer Ingelheim's strategic priority is to focus on the company's core areas of expertise and businesses with an established global scale, or where a pathway to a global scale can be achieved and prioritized among Boehringer Ingelheim's portfolio opportunities," says Professor Dr Andreas Barner, chairman of the BI board. “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."

"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,” adds Dr Olivier Brandicourt, chief executive of Sanofi. “This transaction would allow Sanofi to become a world leader in the attractive non-prescription medicines market.  I am confident that Boehringer Ingelheim will enable Merial to fully express and develop its potential in the attractive but competitive animal health market."

Posted on December 15, 2015 and filed under Animal Health, Company News, Top Story.