Health care giants Merck & Co. Inc. (MRK) and Sanofi-aventis (SNY, SNYNF.PK) Tuesday said in a joint statement that they have mutually agreed to terminate their previous deal to form a new joint venture in animal health. The companies cited increasing complexity in the implementation of the proposed transaction as the reason for discontinuing their agreement.
It was on March 9, 2010 that the companies announced their intention to combine Merial, the animal health business of Paris, France-based sanofi-aventis, with Whitehouse Station, New Jersey-based Merck's animal health unit Intervet/Schering-Plough. Since then, the companies had worked diligently to bring the joint venture into fruition, including submitting requests for required antitrust reviews.
However, the nature and extent of anticipated divestitures and the length of time required for regulatory review worldwide are the main barriers being faced by the companies in the process. Therefore, Merck and sanofi-aventis have mutually determined that ending their plan is in the best interests of the companies, their respective shareholders as well as the employees of Merial and Intervet/Schering Plough.
As a result of termination, both Merial and Intervet/Schering-Plough will continue to operate independently. Each company will keep its current, separate animal health assets and businesses. There is no penalty to either party in connection with the termination of the agreement, and each party is responsible for its own expenses, the companies said.
Boxmeer, Netherlands-based Intervet/Schering-Plough operates as a subsidiary of Merck and is focused on the research, development, manufacturing and marketing of animal health products. The business had posted sales of $2.9 billion in 2010.
Merial, formed in 1997, has operations in more than 150 countries globally. It was a 50-50 joint venture between Merck and sanofi-aventis, and sanofi-aventis acquired Merck's interest in 2009 for a cash consideration of $4 billion. Now, it is a wholly-owned subsidiary of sanofi-aventis and generated annual sales of $2.6 billion in 2010.
At the time of the deal announcement, the enterprise value of Merial and Intervet/Schering-Plough were fixed at $8 billion and $8.5 billion, respectively.
MRK rose $0.48 and closed Monday's trading at $32.39 on 15.26 million shares.
SNY ended trading at $34, up $0.63, on a volume of 2.7 million shares.
SNYNF.PK closed trading at $66.32 on March 18.
by RTTNews Staff Writer
For comments and feedback: editorial@rttnews.com