Sanofi-aventis To Acquire Chattem

Sanofi-aventis and Chattem have entered into an agreement under which sanofi-aventis is to acquire Chattem for approximately $1.9 billion.

Sanofi-aventis also announced that it will seek to convert its antihistamine brand known as Allegra (fexofenadine HCl) in the US, from a prescription medicine to an OTC product. Upon Allegra’s conversion, Chattem will assume responsibility for the Allegra brand as part of becoming the platform for sanofi-aventis’ US OTC and consumer healthcare business.

As per the terms of the agreement, Sanofi-aventis will commence a tender offer for all outstanding shares of Chattem at $93.50 per share in cash. The offer price represents a 34% premium above the closing price of Chattem’s shares on December 18, 2009 and a 44% premium above the average closing price of Chattem’s shares during the six months preceding the announcement of the transaction.

Reportedly, following the successful completion of the tender offer, a wholly-owned subsidiary of sanofi-aventis will merge with Chattem and the outstanding Chattem shares not tendered in the tender offer will be converted into the right to receive the same $93.50 per share in cash paid in the tender offer. The tender offer will commence in January 2010 and the companies anticipate the transaction to close in the first quarter of 2010.

The transaction is expected to be accretive to sanofi-aventis’ earnings as early as year one. The acquisition will allow sanofi-aventis to optimise and retain the full value of the Allegra switch to an OTC product.

Christopher Viehbacher, CEO of Sanofi-aventis, said: “The acquisition of Chattem will be a milestone in sanofi-aventis’ transformation strategy and will provide us with the ideal platform in the US consumer healthcare market, which represents 25% of the current worldwide opportunity.

“In addition, we believe our ability to convert prescription medicines to OTC products will be enhanced by Chattem’s leading sales, marketing and distribution channels. We have great respect for Chattem’s management team. With the potential access to switch products such as Allegra, I believe this team will take Chattem to even higher levels.”

Zan Guerry and the senior team of Chattem have agreed to lead sanofi-aventis’ US consumer health division following the close of the transaction. Sanofi-aventis announced it would maintain both of Chattem’s existing manufacturing facilities and will continue construction on the third. The corporate brand of Chattem will also be maintained.