Friday, October 1, 2010

Nearly $1 Billion Of Merck-Intervet Animal Health Assets For Sale By Morgan Stanley

The "big picture", here? Bust-up, confirmed -- but big antitrust hurdles remain -- to create the world's largest global Animal Health behemoth. Per Bloomberg this morning:

. . . .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. . . .

Recall all that affectionate backscratching, at the Morgan Stanley conference? Sure you do. Now we have confirmation as to why it occured.


Anonymous said...

I dunno, $1B (roughly 20% of the combined sales) hardly seems like a bust up. This is far, far less than I guessed and represents a "win" for Merck and SA if they pull it off.

Condor said...

Well. . . my perspective is that it is a bust up of Schering-Plough's original position.

I think that is pretty well bricked and mortared in place:

S-P acquires Organon/Intervet (2008). Merck Acquires S-P (2009). New Merck contributes all the Intervet AH assets to a NEW Merial JV, with Sanofi (2010).

Now, New Merck proposes to contribute the rest, and take -- in return -- a 50-50 stake in the New Merial JV.

So, New Merck actually releases majority control over everything S-P ever had in Animal Health. And -- to satisfy Antitrust authorities -- some $1 billion of the JV's assets will be sold to Abbott, Pfizer, Lilly or the like.

That's a bust-up, from S-P's perspective, by my lights.

Namaste -- do stop back by!

Condor said...

Oh -- I left out a step: Merck transferred about $4 billion of AH assets to the "Old" Merial JV, in return for cash, in mid-2009. That was a half-year before the S-P assets were sent over.

Sorry for that omission -- again, S-P's position is decimated.

That said, I do appreciate the micro-perspective you suggest, on this one piece of the overall series of transactions.