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news.Sanofi-aventis has exercised its option to combine Merial with Merck’s animal health business Intervet/Schering-Plough to create a global player in animal health. The new joint venture would be equally-owned by Merck and sanofi-aventis.
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Reportedly, the entreprise value of Merial has been fixed at $8bn and the entreprise value of Intervet/Schering-Plough at $8.5bn, leading to a true-up payment of $250m to Merck to establish a 50/50 joint venture.
An additional amount of $750m will be paid by sanofi-aventis, as per the terms of the agreement signed on July 29, 2009. All payments, including adjustments for debt and certain other liabilities will be made upon closing of the transaction.
Moreover, the new joint venture is expected to offer a broader portfolio of animal health products and services in pharmaceuticals and biologics, as well as the ability to capitalise on growth opportunities in all fields and countries around the world.
The companies said that both Merial and Intervet/Schering-Plough will continue to operate independently until the closing of the transaction.
Christopher Viehbacher, CEO of sanofi-aventis, said: “The upcoming combination of Merial and Intervet/Schering-Plough is an exciting opportunity for sanofi-aventis to create with Merck a leading company in the Animal Health strategic and growing sector. I am convinced that, together, we will create strong value in bringing broader and improved offerings in both pet and production animal segments. This transaction represents another consistent milestone in our diversification strategy to bring sustainable growth to sanofi-aventis.”
Richard Clark, chairman, president and CEO of Merck, said: “This new joint venture delivers on Merck’s commitment to customer focus by creating one of the broadest portfolios of animal health products and services in pharmaceuticals and biologics for millions of customers who include farmers, veterinarians and pet owners. The planned joint venture will have an attractive geographical network of global technology and expertise to provide health solutions based on customers’ needs, which often vary regionally.”
The formation of the new animal health joint venture is subject to execution of final agreements, antitrust review in the US, Europe and other countries and other customary closing conditions. The completion of the transaction is expected to occur in approximately the next 12 months.