Sanofi's Negotiations to Sell Opella Stake Exposed, €16 Billion Deal Triggers Threat of Strikes from French Unions!

Sanofi is currently in "exclusive talks" with U.S. private equity firm Clayton, Dubilier & Rice (CD&R) to sell a 50% controlling stake in its consumer healthcare business Opella. The French government has confirmed a commitment from CD&R, based in New York, to ensure that Opella's production facilities in France will remain intact and that there will be no disruption to the supply of drugs to the country, removing a potential obstacle to the deal.

Sanofi said the proposed deal valued Opella at 16 billion euros and stressed that CD&R's offer for a 50 percent stake was "binding and fully funded." In addition, French public sector investment bank Bpifrance plans to buy a 2% stake in Opella and take a seat on its board.

The deal, expected to close "at the earliest" in the second quarter of next year, will see Sanofi step up its investment in innovative drugs and vaccines and mark the French drugmaker's formal joining the ranks of biopharmaceutical giants Johnson & Johnson, Pfizer and GlaxoSmithKline.

"With this transaction, Sanofi will be able to focus even more on providing innovative treatments for patients suffering from debilitating or fatal diseases and viruses, such as RSV, COPD or multiple sclerosis," Sanofi CEO Paul Hudson said in a press release.

Analysts at ODDO BHF supported the decision, arguing that a divestiture or partial divestiture of the consumer business would allow Sanofi to reallocate capital to research and business development, and recommended that Sanofi use some of the capital to offset the financial impact of the divestiture through share buybacks.

Hudson first floated the idea of spinning off the consumer health division last October. Since then, CD&R and PAI Partners, another private equity giant, have made separate bids for Opella. Earlier this month, Reuters reported that CD&R had made a formal offer to buy 50 percent of Opella's consumer healthcare business. Last week, Sanofi said it was surprised by PAI's move to raise its 200 million euro offer after the deadline.

Sanofi's commitment that Opella would continue to operate in France followed a call by French unions for workers to strike on Thursday in protest at the deal. Opella is a leader in over-the-counter medicines, vitamins, minerals and supplements. Its product line includes the well-known antihistamine Allegra, non-opioid painkiller Doliprane, stomach cramping relief Buscopan, Selsun Blue shampoo, and pain treatments Icy Hot and Gold Bond, among others. Opella employs 11,000 people in 100 countries and generated sales of 5.2 billion euros ($5.6 billion) in 2023, accounting for 11% of Sanofi's total revenue. In addition, the company operates 13 production sites and four research and development innovation centers.