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An offer from US private equity firm Clayton, Dubilier & Rice has beaten rivals, pursuing French pharmaceutical company Sanofi’s consumer healthcare division, in what is set to be the largest European healthcare deal this year, according to five people with direct knowledge of the process.
The American group on Thursday edged out a submission from a consortium led by French private equity firm PAI as it nears a deal with the French seller. Negotiations between Sanofi and CD&R will now continue, the people said. A deal could be reached within days but is not yet finalised.
CD&R’s offer values the business, which makes over-the-counter pain management and allergy medications, such as Doliprane and Allegra, at €15.5bn. Sanofi would keep a stake of about 50 per cent in the business with a view to selling it in the next few years, the people said.
Sanofi did not immediately respond to a request for comment. CD&R and PAI declined to comment. The offer was first reported by French newspaper Les Echos.
A transaction would be the latest of several sales of consumer divisions by pharmaceutical companies, as large groups in the sector seek to dispose of steady but low-earning businesses to focus their resources on the riskier but more lucrative field of drug development.
Sanofi has been exploring options for a sale or a potential float since it announced plans to separate the division a year ago. The Opella consumer division accounts for a tenth of the group’s total sales.
Chief executive Paul Hudson told the Financial Times last year that a future as a publicly listed entity was “the most likely path” for the division, but Sanofi seems to now be moving towards a private equity-led takeover.
In 2021, GSK and Pfizer listed their joint-venture consumer healthcare business Haleon in London, while Johnson & Johnson of the US separated off its consumer company Kenvue in 2022.
In keeping a large stake in Opella, Sanofi would seek to benefit from the reliable earnings it offers. GSK and Pfizer also both maintained large stakes in Haleon on listing, which they have since sold down.
Hudson will now focus on improving the company’s research and development output. The executive took investors by surprise last October when he decided to scrap Sanofi’s margin target for 2025 and unveiled plans to spend an additional €2bn on research in 2024 and 2025, leading to a 19 per cent hit to the company’s share price.
Sanofi is heavily reliant on income from its blockbuster asthma and allergy treatment Dupixent; developed by US drugmaker Regeneron, the drug accounted for almost a quarter of sales in 2023, but will lose patent protection around 2031.
Hudson has outlined 12 potential blockbuster candidates to shareholders in a bid to convince them that he can deliver on the company’s R&D ambitions.
Reporting by Ian Johnston, Adrienne Klasa, Ivan Levingston, Oliver Barnes and Alexandra Heal