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France is taking a small stake in Sanofi’s consumer healthcare business in order to quell a political backlash, as the pharmaceutical company presses ahead with a €16bn deal that would hand control of the unit to US private equity group Clayton Dubilier & Rice.
Sanofi said on Monday it was entering exclusive talks with CD&R to sell it 50 per cent of the division, which makes over-the-counter medication such as the Doliprane paracetamol painkiller, a household name in France.
French investment bank Bpifrance will also buy about 2 per cent of the business, known as Opella, Sanofi said in a statement. The moves follow a political backlash over the interest from CD&R and its implications, including for jobs in France.
Economy minister Antoine Armand on Sunday pre-empted the Bpifrance announcement in an attempt to make the transaction more palatable, underscoring that the government had obtained “guarantees that Opella will be developed and maintained in France”.
CD&R trumped a rival offer led by French rival PAI, adding to the political fallout in recent days after critics questioned why a French player would not be picked instead.
Sanofi chief executive Paul Hudson told reporters on Monday that he understood “the love for Doliprane in France”, adding that “nothing changes” for the medication as he underscored Opella would be headquartered in France.
“Our goal was to pick the best partner to make sure we have the most productive working relationship in our home market for growth and success,” Hudson said.
CD&R’s offer — which gives Opella an enterprise value of €16bn — won out despite an 11th-hour attempt by PAI and its consortium to raise their bid by €200mn.
Hudson declined to comment on how long Sanofi would keep its stake in Opella at 48 per cent, though he said the French pharmaceutical group would be a partner “for the very longest term”.
The deal should close in the second quarter of 2025 at the earliest.
Europe’s largest healthcare deal this year blew up into a test for France’s newly appointed government under Prime Minister Michel Barnier.
France has long been protective of its largest companies and often hostile to foreign takeovers, but in this case not only opposition parties hit out at the deal — so did some lawmakers from Emmanuel Macron’s own centrist party, at a time when the president is in an awkward power-sharing agreement with Barnier.
The sale to CD&R sparked concerns over potential shortages in future of brands such as Doliprane, because in France the government rationed paracetamol during the Covid-19 pandemic. Worries also flared over Opella’s 1,700 employees in France, while the deal raised uncomfortable questions over Macron’s years-long push to bring more pharmaceutical production back to France to create industrial jobs.
Sanofi held firm, however, despite PAI’s attempt at a comeback.
“The candidates for a stake in Opella have all had the same opportunity to submit their best offer, within the deadline of this process, which was identical for all,” Sanofi said last week in relation to PAI’s attempt at a second bid.
The rebuff marked the second time in weeks that a big European private equity firm tried to crank open a bidding process after the deadline, as buyout houses sit on record amounts of dry powder and fight over a pittance of major deals.
In late September, German rail company Deutsche Bahn rejected new bids for its Schenker unit that Luxembourg-based CVC had submitted after the buyout house had lost out to Denmark’s DSV.
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