French drugmaker to buy U.S. firm
French drugmaker Sanofi-Aventis SA said Monday that it plans to buy U.S. health care company Chattem Inc., maker of over-the-counter mainstays such as Gold Bond skin products, for $1.9 billion in cash.
The deal also gives Sanofi-Aventis a distribution path for its popular allergy drug Allegra, which it wants to switch from prescription-only to over-the-counter, and for future switches of other drugs approaching the end of their patents.
Sanofi said the deal would make it the world’s fifth-largest consumer health care company, up from sixth.
Paris-based Sanofi-Aventis said it will offer $93.50 per share to acquire Chattem, a Chattanooga, Tenn., maker of consumer health care products such as Icy Hot pain relief medicine and Selsun Blue shampoo.
"Chattem is the ideal entry for us in this market," Sanofi Chief Executive Chris Viehbacher told reporters in a conference call.
Chattem ranks among the top 10 U.S. consumer health companies but sells little in other countries. But it has the highest operating profit margin in the business at nearly 35 percent, while giants such as Procter & Gamble and Johnson & Johnson Consumer Health Care hover around 20 percent or below.
Viehbacher said Chattem has an excellent sales and marketing operation, which will handle U.S. sales of Allegra after the acquisition.
Sanofi-Aventis also plans to start selling some of Chattem’s products in other countries, particularly in Latin America, where Sanofi already made two small acquisitions this year, and to boost sales in Canada.
"Most of the initial benefit will come from taking Chattem and expanding into other markets," Viehbacher said, saying the U.S. launching of Sanofi-Aventis brands, generally unknown here, would be prohibitively costly.
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