Sanofi and Merck abandon animal health tie-up
French pharmaceutical giant Sanofi-Aventis and US group Merck on Tuesday abandoned their plans to create the world's biggest animal health company due to difficulties obtaining regulatory approval.
"The companies are discontinuing their agreement primarily because of the increasing complexity of implementing the proposed transaction, both in terms of the nature and extent of the anticipated divestitures and the length of time necessary for the worldwide regulatory review process," they said in a joint statement.
The companies announced last March they would merge Sanofi-Aventis's Merial unit with Merck's Intervet/Schering-Plough to create the leader in the animal health sector with 29 percent of the market on sales of about $5.3 billion dollars (3.7 billion euros)
"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 of Merial and Intervet/Schering Plough.
Competition authorities had not yet given the merger a green light but told the companies they would need to make numerous divestitures which made the deal less attractive, an analyst told AFP on condition of anonymity.
The analyst said Sanofi could also count on higher operating margins with Merial than with joining with Merck, and that divisions within Sanofi's management over the deal had persisted.
Merial posted $2.6 billion in sales in 140 countries last year, compared to $2.9 billion for Intervet/Schering Plough.
© 2011 AFP