(Bloomberg) -- Sanofi entered a fresh round of exclusive negotiations to sell control of its consumer health unit to Clayton Dubilier & Rice after France secured commitments on local employment and investment and agreed to take a minority stake.
The talks would see Sanofi transfer a 50% controlling share of its Opella business to the US buyout firm, according to a statement Monday, giving it an enterprise value of about €16 billion ($17.4 billion).
The renewed negotiations come after CD&R agreed to pledges around local jobs, investments and production, Bloomberg reported earlier. Sanofi encountered a backlash in France when it chose the US firm over a French rival as the frontrunner to acquire the maker of Doliprane painkiller earlier this month.
State-owned investment firm Bpifrance will spend between 100 million euros and 150 million euros for a stake of 1% to 2% in Opella, Nicolas Dufourcq, chief executive officer of BPIfrance, said at a press conference on Monday morning
“We’ll be on the board of this company,” Dufourcq said. “And when Bpifrance is on a company board, it’s vocal, active, and sometimes activist if necessary.”
French Investment
French Finance Minister Antoine Armand said the proposal calls for 70 million euros to be invested in France. The agreement includes tens of millions of potential fines in case Opella fails to maintain or boost production, investment, procurement and jobs in France. The consumer business also agreed to keep its headquarters in the country.
Sanofi’s shares traded 0.2% lower on Monday morning in Paris. The stock has risen about 2% over the past 12 months.
Despite the commitments it faces in France, CD&R has been drawn to the Sanofi consumer health-care business due to the stable, cash-generative nature of the industry. The firm, which has expertise in buying corporate carveouts and building them up as independent businesses, has been hunting for major acquisitions after raising a record $26 billion buyout fund last year. It hasn’t made a sizeable purchase in Europe since 2021, when it bought British grocer Wm Morrison Supermarkets Plc.
The French government will now formally examine the proposed sale of Opella, as it involves foreign investment. Similar deals have been subject to particular conditions or even vetoed completely. A bid by Canada’s Alimentation Couche-Tard Inc. for supermarket chain Carrefour SA was blocked in 2021. Teledyne Technologies Inc.’s purchase of Photonis, a company that makes night-vision gear for the military, also failed to win endorsement.
In the proposed sale of Opella, CD&R prevailed over French rival PAI Partners. After the US firm and Sanofi entered a previous round of exclusive talks, PAI submitted an improved offer, according to people familiar with the matter.
Upgraded Guidance
If all goes ahead as envisioned, the Sanofi deal is expected to close in the second quarter of next year at the earliest. The pharmaceutical company also said it will upgrade its 2024 earnings guidance.
Details of what the sale proceeds will be used for have not yet been set out, with Sanofi inficating that this would be in line with its capital-allocation priorities. A share buyback is likely, Jefferies analyst Peter Welford said in a note.
Selling the unit that makes Doliprane, the most-used drug in France, will allow Sanofi to focus on pharma innovation, Chief Executive Officer Paul Hudson has said. Sanofi will join peers including GSK Plc and Novartis AG that have split off their consumer health divisions in recent years.
Sanofi said it will consider using proceeds of the deal for acquisitions to accelerate its transformation into a pure-play biopharmaceutical company.
--With assistance from Swetha Gopinath, Francois de Beaupuy and Dinesh Nair.
(Updates with details of commitments to France, CD&R’s rationale for deal)
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