The French pharmaceutical company Sanofi-Aventis has agreed to acquire Tennessee, US-based Chattem Inc. for $1.9 billion (Ôé¼1.3 billion).
Chattem, which was founded 130 years ago, makes and sells household and personal care products such as over-the-counter drugs, cosmetics and dietary supplements.
Its brands include Icy Hot pain-relieving patches and gel and ACT mouthwash, as well as Selsun Blue shampoo and Gold Bond lotions and powders.
The company posted revenues of $454.9 million (Ôé¼317.6 million) in 2008.
ÔÇ£Chattem has regularly demonstrated its ability to sustain regular growth, both in terms of sales and profit, through the development of its own brands and the successful integration of acquired products,ÔÇØ said a statement released by both companies.
Sanofi said most of the benefits from the dealÔÇöwhich underscores its efforts to grow via small and mid-size acquisitionsÔÇöwill come from expanding Chattem's products outside the US.
For its part, Chattem will develop and convert SanofiÔÇÖs Allegra antihistamine prescription drug into an over-the-counter (OTC) product.
The deal will greatly increase SanofiÔÇÖs OTC presence in the huge US market, which is worth an estimated $20 billion (Ôé¼14 billion).
In 2009 Sanofi generated $2 billion (Ôé¼1.4 billion) in OTC revenues, with little presence in the US market, which represents around 25 per cent of the global market for pharmaceuticals.
The French company has confirmed it will keep ChattemÔÇÖs two manufacturing plants in the US as well as building a third.
Christopher Viehbacher, SanofiÔÇÖs CEO, said: ÔÇ£We believe our ability to convert prescription medicines to OTC products will be enhanced by ChattemÔÇÖs leading sales, marketing and distribution channels.
ÔÇ£We have great respect for ChattemÔÇÖs world-class management team, which has an excellent track record of sales and earnings growth based on building strong brands.ÔÇØ
Zan Guerry, chairman and CEO of Chattem, added: ÔÇ£This transaction offers immediate and significant value for ChattemÔÇÖs shareholders and important benefits to our employees, customers and community.
ÔÇ£I am excited to work with the Sanofi-Aventis team to capture the significant growth opportunities this combination creates, as highlighted by the planned launch of Allegra.ÔÇØ
He concluded: ÔÇ£Chattem will form the base of a new consumer healthcare business in the United States for Sanofi-Aventis, and the headquarters, manufacturing and leadership team will continue to be based in Chattanooga.ÔÇØ
Sanofi has offered $93.50 a share for Chattem, a 34 per cent premium over the US companyÔÇÖs closing price on Friday.
The deal is expected to close in the first quarter of 2010 and be profitable within the first year.
Sanofi has said the deal is likely to make it the world's fifth-biggest OTC drugs company by revenue, from its current sixth position. Executives said they expect the company to outpace the market's expected annual three per cent growth rate.
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