Merck & Co. and Sanofi-Aventis SA abandoned a plan to combine their animal health businesses in a 50-50 joint venture, citing difficulty divesting parts of the operation and securing approval from antitrust regulators.
In a joint March 22 statement, the companies said they ended the agreement to combine Merck’s Intervet animal health unit with its Sanofi counterpart, Merial, “primarily because of the increasing complexity of implementing the proposed transaction.”
That reflected both “the nature and extent of the anticipated divestitures and the length of time necessary for the worldwide regulatory review process,” Merck and Sanofi-Aventis said in the statement.
The planned merger, announced in March 2010, would have created the world’s biggest animal health company by revenue, with about a quarter of the market. Intervet and Merial had combined global revenue of $5.5 billion in 2010.
Merck, based in New Jersey, and Sanofi-Aventis, based in Paris, “mutually determined that ending their plan is in the best interests of both companies and their respective shareholders,” according to the March 22 statement.
After the plan was announced a year ago, industry observers said the companies likely would have to sell parts of the operation to gain approval from government regulators. Intervet and Merial have “areas of overlap,” primarily in cattle and poultry vaccines, John Volk, an analyst with Brakke Consulting, Inc., said then.
Founded in 1997, Merial was previously a joint venture between Merck and Sanofi-Aventis until September 2009, when Sanofi-Aventis bought Merck’s stake for $4 billion. Delays in the companies’ attempt to re-establish a joint venture indicated they were facing regulatory difficulty, analysts said.
“There were no doubt several reasons why things weren’t coming together smoothly,” Volk said in a March 22 e-mail.
Both Merck and Sanofi-Aventis remain “committed” to their respective animal health businesses, the companies said March 22.
Merial’s cattle brands include Corid, Igenity, Ivomec, Reliant and Respishield. Intervet’s U.S. brands include Vista cattle vaccines, Revalor growth supplements and Safe Guard deworming products.