(Bloomberg) -- Sanofi has received binding offers for its consumer health division from private equity firms Clayton Dubilier & Rice and PAI Partners, as the French drugmaker inches closer to one of the largest European deals this year, according to people familiar with the matter.
The two buyout firms made separate bids for the business by Monday’s deadline, the people said. Sanofi is likely to make a final decision on the unit in the coming days after reviewing the offers, which could value the unit at €15 billion ($16.7 billion) or more, the people said.
Sanofi could decide to pursue a spinoff of the business if the bids aren’t attractive, the people said, asking not to be identified as the matter is private.
PAI is seeking to rope in British Columbia Investment Management Corp. to back its bid, the people said. It’s also been in talks to bring Abu Dhabi Investment Authority and Singapore sovereign fund GIC Pte into the consortium, Bloomberg News reported in August. PAI, the only French bidder in the process, previously bought a controlling stake in PepsiCo Inc.’s Tropicana Brands Group juice business and also has an ice cream joint venture with Nestle SA.
CD&R, which raised a record $26 billion buyout fund last year, has been an active investor in France in recent years. In July, CD&R teamed up with Permira and offered to take cybersecurity company Exclusive Networks SA private. It’s also an investor in Mobilux, one of the largest home equipment retailers in France with nearly 500 stores across the country.
Deliberations are ongoing and there’s no certainty they will lead to a transaction, the people said. Representatives for BCI, CD&R and PAI declined to comment.
Sanofi is reviewing potential separation scenarios for the consumer health business with a transaction in the fourth quarter of this year at the earliest, a representative for the firm said, adding that preparations are on track.
“We expect to select the best option for Sanofi and its stakeholders in the next few weeks,” the representative said. “We are keeping all options open, including a listing, and a sale, to maximize value creation for all our stakeholders.”
Banks and other lenders are lining up more than €10 billion of debt to back a buyout of Sanofi’s consumer health division, Bloomberg News reported Tuesday. The debt packages backing CD&R and PAI’s bids are fairly similar, and include a mix of euro and dollar-denominated leveraged loans and high yield bonds to attract as much liquidity from institutional investors as possible, people with knowledge of the matter said.
Sanofi announced its plans to review all options to split the consumer health unit last October, as it looks to generate better long-term value from cutting-edge therapies, particularly in immunology or in vaccines. The drugmaker is likely to retain a significant minority stake in the business after any sale, which would reduce the amount of capital that bidders need to commit, people familiar with the matter have said. It’s also simultaneously moving forward with preparations for a possible listing of the business.
A potential sale of the OTC business could rank among the largest deals in Europe this year and will be a sign of revival in health-care dealmaking in the continent. Buyout firm GTCR is in advanced talks on a potential acquisition of German generic drugmaker Stada Arzneimittel AG, people familiar with the matter have said.
--With assistance from Aaron Kirchfeld, Ashleigh Furlong, Layan Odeh and Eleanor Duncan.
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