Regulatory headwinds scuttle Sanofi, Merck JV

Even the biggest companies can experience some stiff headwinds when attempting an ambitious collaboration. For Sanofi-Aventis and Merck, the winds proved strong enough to blow their planned combination of animal health businesses right onto the rocks.

Envisioned as a merger of equals--with each putting a business worth around $8 billion into the joint portfolio--the two companies say now the deal was just too complex to complete. Execs had already been forced to delay the planned completion of the project after flagging concerns from antitrust regulators. And analysts were looking for some $500 million in divestitures to clear the regulatory pathway.

"Merck and Sanofi-Aventis mutually determined that ending their plan is in the best interests of both companies and their respective shareholders, as well as the employees," Sanofi stated in a release. They now will go their separate ways after eating any costs incurred.

Like other analysts, WestLB's Oliver Kaemmerer told Reuters the announcement came as an "unpleasant surprise." They were looking for each company to gain key synergies in the transaction while delivering a venture with $5 billion in annual sales.

- read the joint announcement
- see the story from the Wall Street Journal
- check out the coverage from Reuters