30.07.2009

Sanofi-Aventis agreed to buy Merck & Co.’s half of their Merial animal-health venture for $4 billion. Sanofi will pay cash for the 50 percent it doesn’t own of Merial. Merck and Sanofi, which compete in making drugs for people, have worked together for more than a decade to build Merial into a company with $2.6 billion in annual sales.

After Merial is sold to sanofi and Merck acquires Schering in the fourth quarter, sanofi has an option to get Merck back as a partner by combining Merial with Intervet. The valuation of Intervet is yet to be determined, but will be more than Merial, so sanofi will pay the new Merck some cash to reestablish the 50-50 joint venture. 

Merial would be valued at $8 billion, while Intervet would be valued at $8.5 billion. Sanofi would pay $750 million in cash to Merck to reflect the value Intervet would have fetched in a sale. There will then be a second payment by Sanofi to make each company’s contribution to the venture equal to 50 percent.
Merck is selling the stake because regulators have said its purchase of Schering-Plough would make it too dominant in the animal health market.
Merck said that deal was subject to approval by antitrust regulators, but that it expected the transaction to be completed before its takeover of Schering-Plough in the fourth quarter of this year.