Sanofi's Merial and Merck's Intervet have called off their planned merger. The two companies said the regulatory issues relaed to antitrust considerations were too much. If combined, the business would have represented $5 billion in sales but analysts say the two would have had to divest about $500 million in assets -- particularly in the poultry vaccine area.
Down On The Pharm: Implications of the Merial/Intervet "No Deal".
Both companies are able to walk away without penalty and each will assume their own expenses related to due diligence - no harm, no fowl so to speak.
The lack of a deal may result in other buyers coming forward for some or all of the assets. Seven of the top 12 publicly traded big pharma companies have some animal health businesses. Several big pharma companies appear to have chosen a diversification strategy to even out dips from their pharma business often related to patent expirations. Pfizer has indicated a willingness to sell off its Fort Dodge Animal Health business as its CEO has indicated a desire to focus its assets and attention on th epharma business alone. FDAH generated $3.58 billion in 2010 sales.
Potential buyers for FDAH might include Eli Lilly, Bayer and Novartis according to industry watchers. All five big pharma companies who reported on their animal health business lat year reported growth, including Sanofi (2.6%), Bayer and Lilly (15%), and Pfizer (29%). Pfizer's big increase was due to assets acquired in its Wyeth purchase though and don't represent organic growth. Nevertheless, their should be suitors if either Sanofi or Merck are looking to sell their assets.
Posted by Bruce Lehr March 26th 2011.
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