Thursday, July 30, 2009

So -- "Merial to Sanofi" -- With A "Two-Step Acquisition" Option on Intervet: Sanofi CEO

I guess this makes my ". . .Or, Both?" headline, of two months ago (on June 5, 2009), not such a terrible conjecture afterall, per Reuters, this morning:

. . . .If Sanofi and the new Merck agree to join Merial and Intervet/Schering-Plough (ISP), the value of Merial would be $8 billion and $9.25 billion for ISP. Any such joint venture would be subject to antitrust approval, however.

Sanofi Chief Executive Chris Viehbacher said at a conference call he saw little duplication in the wider alliance as Merial focuses on pet animals and ISP focuses on livestock. Merial's prime brands include flea and tick product Frontline and dog heartworm prevention Heartgard.

"There is a little bit of overlap, but not very significant," said Viehbacher. "If we get the opportunity ... we could end up with a business that is better balanced between production animals and companion animals," he added. . . .

UPDATED @ 10 AM EDT -- from the Sanofi Webcast call on the transaction:

On the webcast this morning, Sanofi CEO Viehbacher referred to Sanofi's Intervet call option as a potential "two-step acquisition" of Intervet. . . . exerciseable within 100 days after of the closing of the Merck Schering-Plough merger. . . .

That is definitely the wholly-unvarnished truth -- so here is the relevant slide, from the webcast, with my commentary -- as ever, click it to enlarge:

Okay. For this first part of the deal, I'll once again admire Merck's negotiating strategy, and execution. Sanofi paid right at the top of the market, for the half of Merial it did not already own -- more than three times sales. This is an especially rich price, given the swoon I've noted -- actual sales decreases in constant currencies (of 7 percent; and 10 percent more, with currency headwinds), at least in Intervet, in this past quarter [Merck hasn't filed its SEC Form 10-Q yet]. Wow. As I said here, I would not be at all surprised to see CEO Clark raise more cash, to pay down post-merger debt, by "partnering off" a chunk, or all, of Intervet. Thus -- especially in view of Sanofi's Slide No. 9, above, we'll style this installment as "The Bust-up Chronicles", Chapter 7: ". . . .Step 3: Assess potential [additional] divestments. . . ." -- Yikes.

On the other hand, now that I think about it for a minute, the foreign currency exchange rates, at present, should be a tailwind to Sanofi, at least for now -- it is a Euro-based, and Euro-reporting entity. Thus, all the dollar sales of Merial ought to be enhanced by the present rates of foreign currency exchange. Fascinating -- might that explain part of the high price?

And yet, still we wait, for FDA's asenapine PDAC meeting news, this evening. . . . [Subsequently-created graphic, below.]


Anonymous said...

Take a look beginning at page 963 of the asenapine PDAC background package. The OCP reviewer begins to lay out structure activity relationships and why similar toxicities may be occurring with a wide variety of drugs ( i.e. the
3D structures may allow binding to the same binding sites.)

On page 967 he looks at the antihelminic mectins (Merck and SP animal drugs) and you can see he's postulating that the effects on bones seen with the animals studies of the various antipsychotics described elsewhere in the reviews may be related to these drugs causing bone chips in the knees of race horses.

Since these drugs are also given to farmed salmon this raises the possibility of these being toxins in the human food chain.

There's actually and article related to this in the December 2008 issue of of Drug Safety as well as another article in that issue by Dr. Zornberg the FDA team leader on asenapine that basically outlines all the OCP reviewers concerns.



Condor said...

Wow! You are right -- and this is proof of the Merck "shiny object" strategy -- announcing Merial to Sanofi, and an Intervet-option -- all on the same day of PDAC. A hedge against bad news out of the PDAC? I think so.

Keep it coming.

I'll make this a new post, in a moment!


Anonymous said...

The criminal Hassan and the leFrench are trying to force this on Merck. How can you avoid the EU reg and FTC by side stepping the cannon ball, then when the FTC cannon is empty merge Merial with I/SP? Another criminal action by Hassan's NJ pharma-moffia gang.

I for one have already contacted the FTC and will alert my Senators & Reps about this BS. Again, they side step antitrust laws, so they can merge two companies with a huge overlap profile of biologics and pharma.

Just another way to screw more good people out of a job, lock in a monopoly and line fast Freddy’s pocket with gold! Hey Fred how much is enough?

Anonymous said...

Would someone please explain to me how the merger between Merial and Merck/Intervet could be allowed when the merger between Merck and Intervet/Schering-Plough could not?