Sanofi Acquiring Bioverativ in Deal Costing $11.6 Billion

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Sanofi, the healthcare group based in France agreed to acquire Bioverativ the U.S. based hemophilia specialist at a cost of $11.6 billion. The acquisition, said Sanofi, will give its earnings a boost and increase presence in treatments for the rarest diseases.

The acquisition comes during a time large drug makers have renewed interest in small biotech companies. Some experts have predicted that in 2018 a substantial increase will be seen in these types of mergers and acquisitions.

Sanofi agreed to purchase all the outstanding Bioverativ shares at a cash price of $105 each, which represents a 64% premium to the closing price of Bioverativ as of Friday January 19.

Early in 2017 Biogen Inc. spun off the hemophilia drug specialist Bioverativ.

This acquisition marks the successful return of Sanofi to deal making following its failure to make any major acquisitions over the past few years. This acquisition is the largest for Sanofi since its takeover in 2011 of Genzyme a U.S. based biotech company for the price of $20 billion.

Sanofi was beaten out by Pfizer during 2016 in acquiring Medivation a cancer specialist based in California and missed out as well in acquiring Actelion the biotech company based in Switzerland. Actelion was acquired by Johnson & Johnson in 2017.

Sanofi CEO Olivier Brandicourt in a prepared statement said that with the acquisition of Bioverativ our company welcomes a leader in the expanding hemophilia market.

The market that deals with treating hemophilia is one that has become very important and evolved rapidly thanks to new drugs changing the landscape. In a longer term gene therapy is promising to disrupt the traditional approach to tackling this inherited blood condition.

Sanofi released information that said the sector has approximately $10 billion in sales annually, dealing with over 181,000 people worldwide. It said that hemophilia is the largest market for all rare diseases and was going to increase by over 7% per annual through the end of 2022.

The acquisition, says Sanofi, is going to immediately be accretive to its overall per share earnings for the full financial year of 2018 and up to 5% accretive for the next year. Sanofi said the takeover of Bioverativ would be funded through a mix of its existing cash and an issuing of debut. Brandicourt said the company had the means for further acquisitions.

Sanofi said it is expecting to see a return on invested capital or ROIC in excess of its cost of capital before the end of three years. The France-based group is also expecting to preserve its already solid credit rating.

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