. . . .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.]