Private Equity Firms Circle Sanofi's Consumer Health Business Amid Potential Spinoff

In October 2023, Sanofi SA SNY announced its plans to spin off its consumer healthcare business as the French pharmaceutical company outlined its strategic update to increase investment in its drug-development pipeline and cut costs.

Sanofi said the spinoff would allow it to increase its focus on innovative medicines and vaccines.

Sanofi’s consumer health unit boasts a portfolio that includes popular over-the-counter products like Phytoxil cough syrups, Icy Hot pain relief gels, and Dulcolax laxative tablets. 

According to a Bloomberg report, two private equity firms, Clayton Dubilier & Rice and PAI Partners, made separate bids for Sanofi’s consumer health division.

The update pushes the European pharma giant closer to one of the largest European deals this year, which could value the unit at 15 billion euros ($16.8 billion) or more, the Bloomberg report added.

The separation is expected to occur by Q4 2024 by creating a publicly listed entity headquartered in France.

In July, Goldman Sachs Group Inc. GS and Morgan Stanley MS said they were preparing to arrange more than $6.5 billion (6 billion euros) in debt financing for potential buyers interested in acquiring Sanofi’s consumer health division.

The move highlighted banks’ interest in supporting leveraged buyouts through pre-arranged financing.

Sanofi may opt for a spinoff of its consumer health business if the offers aren’t appealing, Bloomberg noted, citing sources. A company spokesperson told Bloomberg that Sanofi is evaluating potential separation options, with the earliest possible transaction happening in the fourth quarter of this year, and noted that preparations are progressing as planned.

In November 2023, Sanofi reportedly initiated talks with Rothschild & Co. to explore the possibility of spinning off its consumer health division, which could potentially value the business at over $20 billion. 

Rival pharma giants GSK Plc GSK and Johnson & Johnson JNJ split their consumer healthcare units Haleon Plc HLN and Kenvue Inc KVUE, respectively.

Price Action: SNY stock closed at $57.62 on Tuesday.

Read Next:

• Healthcare Software Giant Epic Systems Hit With Lawsuit Over Alleged Monopolistic Practices.

Photo via Company