With Sanofi-Merck deal off, look for animal health M&A

Now that Sanofi-Aventis and Merck have given up on merging their animal-health businesses, they may turn to other acquisitions to bulk up in that area. In fact, the potential bidders for assets Sanofi and Merck wanted to unload to satisfy antitrust regulators may become targets instead.

As Bloomberg reports, Novartis and Bayer had been sniffing around the companies' for-sale assets. Now that those assets aren't up for grabs anymore, those companies may decide to sell their entire animal health businesses, because they're not large enough, Oddo & Cie analyst Jean-Jacques Le Fur told the news service. Either that, or find other animal health assets to snap up.

In fact, Novartis CEO Joe Jimenez (photo) said last fall that the company wants "to gain scale" in animal health and might spend $1 billion to $2 billion on acquisitions to do so. Likewise, as Bloomberg points out, Bayer's chief has called his animal health unit "relatively small" and said that the company would need to decide what to do with the business in the next year or so.

And, as Berenberg Bank's Alistair Campbell told the news service, Sanofi and Merck--which still want the cost efficiencies and additional revenues provided by an animal health merger--may look to buy either company's animal health assets.

"Novartis, which does not have critical mass, will have to decide what to do with its division--either strengthen it or divest it--and Pfizer seems ready to sell its own in order to focus on human health," Le Fur said. "[W]e think a number of transactions will be announced in the next few months."

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