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Merck's half of animal health business sold

September 18, 2009 8:10:41 AM PDT
French drugmaker Sanofi-Aventis SA has completed its $4 billion purchase of Merck & Co.'s half interest in their veterinary medicine business, Merial Ltd., the companies said Friday. The move was required by regulators before Merck can close its $41 billion purchase of New Jersey neighbor Schering-Plough Corp., which also sells animal health products.

Merial, a joint venture founded in 1997, sells two widely used pet medicines, flea-and-tick blocker Frontline and chewable heartworm preventer Heartgard. It also sells Ivomec, which kills parasites in hogs and cattle, and other medicines and vaccines for livestock.

Sanofi-Aventis said the acquisition should boost its net income in the first year after the deal.

"This acquisition strengthens Sanofi-Aventis' position in the attractive animal health market," Sanofi Chief Executive Christopher Viehbacher said in a statement. "It illustrates our strategy to grow and diversify our business in order to become a global diversified healthcare leader."

That's the same strategy behind Merck's plan to buy Schering-Plough - and the other huge merger pending, Pfizer Inc.'s $68 billion acquisition of Wyeth.

Pfizer will get Wyeth's booming biotech and vaccine businesses, the Fort Dodge animal health business and a consumer health division with well-known products including Chap Stick, Advil and Anacin pain relievers, and Preparation H for hemorrhoids.

Similarly, Merck will acquire Schering's biotech division, a consumer products business with staples like the Dr. Scholl's and Coppertone lines, and one of the industry's strongest pipelines of experimental drugs in development.

"The sale of Merck's interest in Merial allows us to remain on track for the closing of our merger with Schering-Plough in the fourth quarter, as planned," said Merck's chairman, Richard Clark.

Sanofi-Aventis retains an option to buy Schering-Plough's animal health business after the combination of Merck and Schering-Plough is completed, although any such deal would have to be approved by regulators here and in other countries.

Merial ranked third last year in global animal health sales, with a market share of nearly 14 percent and revenue of about $2.7 billion. Schering-Plough's Internet animal health business was just ahead of that, with almost $3 billion in revenue last year.

Sanofi's executive vice president for global operations, Hanspeter Speck, will oversee Merial as a subsidiary of Sanofi. Merial has about 5,700 employees and operates in more than 150 companies worldwide.

In New York trading Friday morning, Sanofi shares jumped 63 cents to 36.79, while Merck shares were up 29 cents at $32.30.

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