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Sanofi will press ahead with plans for a spin-off of its consumer division, which could be one of Europe’s biggest deals this year, adding bankers to work on a sale process and preparations for a public listing expected to value the business at about €20bn.
Goldman Sachs and Morgan Stanley will work alongside BNP Paribas and Bank of America on a sale and potential float expected to take place as soon as the end of the year, according to people familiar with the matter.
The processes will run in tandem, a common deal structure known as a “dual track”. Rothschild has also been working with Sanofi since the start of the process.
The consumer division, which accounts for 10 per cent of Sanofi’s sales, has drawn interest from potential private equity bidders, the people said. Analysts at Jefferies estimate the consumer care spin-off could be worth between €18bn and €20bn.
The step-up in preparations come as the European IPO market has shown signs of recovery this year, with a strong listing from Swiss skincare company Galderma, though the debut of German beauty retailer Douglas flopped in March.
In October, the French pharmaceutical company announced plans to separate its consumer healthcare business in the fourth quarter of 2024 at the earliest, saying “the most likely path” would be the creation of a publicly listed entity with its headquarters in France.
“At a certain point you have to decide what’s best for consumer, and what’s best for Sanofi,” chief executive Paul Hudson told the Financial Times in an interview in December.
“For us, being a pure-play biopharma with a different sort of probability of success [and] longer-term thinking . . . works for us. For consumer, being able to manage their own business, move at their own speed and make acquisitions works for them.”
The move makes Sanofi the latest Big Pharma company to seek to separate low-margin, consumer businesses from divisions focused on innovative new medicines that offer higher returns.
In 2022, GSK spun off its consumer healthcare business Haleon, a joint venture with Pfizer, while Johnson & Johnson also listed its consumer business Kenvue in 2023. Pharma companies have been able to sell off stakes in the listed businesses to generate cash for mergers and acquisitions, with GSK exiting its position in Haleon and Johnson & Johnson selling its remaining stake in Kenvue last month.
Hudson has sought to refocus the company on developing treatments for rare diseases and immunology since his appointment in 2019 as the company seeks to build up its pipeline and reduce dependence on hit drug Dupixent. Recent launches include Beyfortus, which prevents a common respiratory virus in children, and Altuviiio, a drug used to manage bleeding in haemophilia A patients.
However, his plan for Sanofi to invest heavily in research and development rather than focus on deals in the coming years took investors by surprise when it was announced in October. Shares tumbled about 20 per cent on the announcement, though they have gained back some of that ground in 2024 for a market value of €112.3bn.
The business remains reliant on its blockbuster asthma drug Dupixent, which brought in €10.7bn in sales in 2023, a quarter of total revenue. Sanofi is seeking new approvals for Dupixent to treat chronic obstructive pulmonary disease, a lung condition associated with smoking.
On Friday, Sanofi said the FDA had asked for more information before approving its broader use but the European Medicines Agency gave the drug a preliminary recommendation for COPD.
Goldman Sachs, Morgan Stanley, Bank of America, BNP Paribas and Rothschild declined to comment.
Sanofi said it did not comment on “market rumours”, adding “preparation for this potential separation project is progressing. We are keeping all options open to maximise value creation for all our stakeholders.”