Veterinary Drug Makers Merial, Boehringer Plan Merger

BI would shed most of its human drug business in a trade with Merial owner Sanofi.

Merial, which makes leading pet medications such as Frontline and Heartgard, may merge with competitor Boehringer Ingelheim in late 2016, creating the world’s second-largest animal health company.

Merial’s owner, France-based Sanofi S.A., reported today that it wants to trade Merial in exchange for about $5.2 billion and most of Boehringer’s human health care business.

The asset swap would push Boehringer, with combined sales of more than $4 billion a year, to No. 2 on the rankings of animal health companies, behind only Zoetis Inc.

“Boehringer Ingelheim Animal Health is and will stay strongly committed to bringing novel, innovation-driven solutions to veterinarians and animal owners,” said Andreas Barner, Ph.D., M.D., chairman of Germany-based BI. “Our combined animal health business would be well positioned for growth and emergence as a leader globally.”

Among BI’s top animal medications are the swine vaccine Ingelvac Circoflex, the pain-relief drug Metacam and the Ultra Duramune vaccine for dogs.

The merger would be “highly complementary” and build “on Merial’s expertise in companion animals and poultry and BI’s expertise in swine,” the companies stated.

BI’s U.S. division, Boehringer Ingelheim Vetmedica Inc., is located in St. Joseph, Mo. Merial’s headquarters are in Duluth, Ga., and Lyon, France.

Lyon would remain “a key operational center,” according to both companies.

“Boehringer Ingelheim will commit to maintain business operations, R&D and manufacturing centers in France,” they stated. “As the U.S. market is an important part of Merial’s business, Boehringer Ingelheim would pay particular attention to sustain the momentum of the U.S. operations. Boehringer Ingelheim will give particular attention to social matters as well as skills and retention sensitivities.”

Worldwide, Merial has 6,000 employees, 13 research and development centers, and 18 plants. BI’s animal health business employs 4,000 people and does the bulk of its research and manufacturing in the United States.

The transaction requires multiple regulatory approvals but is expected to close in the fourth quarter of 2016.

The deal would be the latest shakeup in the veterinary drug market. In early 2015 Novartis AG merged with Elanco Animal Health and Zoetis purchased Abbott Animal Health.

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