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Sanofi, Merck Said to Ready $1 Billion Animal-Health Asset Sale

Sanofi-Aventis SA and Merck & Co. plan to sell animal-health assets valued at about $1 billion after agreeing to combine their veterinary-medicine businesses this year, two people with knowledge of the matter said.

Morgan Stanley, which is advising on the sale, sent out documents to prospective buyers, which may include Pfizer Inc., Bayer AG, Boehringer Ingelheim GmbH, Eli Lilly & Co. and Novartis AG, said the people, who declined to be identified because the matter isn’t public. The process is still at an early stage and probably won’t get under way until later this year, they said.

Selling the assets may allow Paris-based Sanofi and Merck, of Whitehouse Station, New Jersey, to resolve antitrust concerns and complete the joint venture. Chris Viehbacher, Sanofi’s chief executive officer, in May said the company would probably need to sell some animal-health assets to satisfy regulators. He also said there was “significant interest” in the business.

Sanofi last year acquired Merck’s half of their Merial animal-health venture for $4 billion before agreeing to combine the business with Merck’s Intervet unit. Merck obtained Intervet when the U.S. company purchased Schering-Plough Corp. last year.

Photographer: Tim Boyle/Bloomberg

Chris Viehbacher, Sanofi’s chief executive officer, in May said the company would probably need to sell some animal-health assets to satisfy regulators. He also said there was “significant interest” in the business. Close

Chris Viehbacher, Sanofi’s chief executive officer, in May said the company would... Read More

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Photographer: Tim Boyle/Bloomberg

Chris Viehbacher, Sanofi’s chief executive officer, in May said the company would probably need to sell some animal-health assets to satisfy regulators. He also said there was “significant interest” in the business.

Merial’s products include a bird-flu vaccine for poultry and Frontline, the best-selling flea spray for pets, while Intervet makes a device to vaccinate pigs without a needle and the Safe-Guard treatment to deworm dogs.

World’s Largest

The combined venture, which creates the world’s largest animal-health business, will have annual sales of about $5.3 billion before any divestments, Viehbacher said in a Sept. 15 presentation to investors. The transaction probably will close in the first quarter next year, he said.

It was unclear whether the sale would occur in one transaction or in parts, said one of the people.

Jean-Marc Podvin, a spokesman for Sanofi, declined to comment, as did Merck’s David Caouette, Joan Campion, a spokeswoman for New York-based Pfizer, and Lilly’s Mark Taylor. Guenter Forneck, a spokesman for Bayer in Leverkusen, Germany, and Judith von Gordon of Ingelheim, Germany-based Boehringer also declined to comment. Eric Althoff, a spokesman for Novartis in Basel, Switzerland, didn’t immediately return calls.

Bayer needs to decide the future of its animal-health unit in the next 12 to 18 months, Chief Executive Officer Marijn Dekkers said at a dinner with journalists in Cologne Sept. 27. With 1 billion euros ($1.37 billion) in annual sales, the Bayer unit is now “relatively small” compared with competitors, Dekkers said.

“That’s an important question -- are we too small?” said Dekkers. Bayer can “clearly afford” deals bigger than 1 billion euros, he said. The company bid unsuccessfully for the Intervet unit last year, according to people familiar with the situation.

Lilly would be interested in looking at assets that Sanofi and Merck sell, Chief Executive Officer John Lechleiter said in a March interview. Virbac SA, a French maker of animal vaccines and health-care products for pets, has said it may acquire some of the assets.

To contact the reporters on the story: Jacqueline Simmons in Paris at jackiem@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net.

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net;

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