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FTC requires divestitures for Boehringer, Sanofi asset swap deal

Boehringer Ingelheim has agreed to divest certain animal health products in the U.S. to settle the U.S. Federal Trade Commission's complaint that the company's asset swap deal with Sanofi might be harmful for competition.

The proposed asset swap transaction entails the acquisition of Sanofi's animal care subsidiary Merial, valued at $13.53 billion, by the German pharmaceutical company, with Sanofi acquiring Boehringer's consumer healthcare business unit, valued at $7.98 billion, along with cash compensation from Boehringer of $5.54 billion.

Boehringer Ingelheim's consumer healthcare business in China would be excluded from the transaction.

In a complaint, the FTC alleged that the asset swap would have anticompetitive effects in the U.S. markets for various vaccines for companion animals and certain parasite control products for cattle and sheep. The complaint also states that the deal could result in higher prices and reduced service in these markets, and might raise the chances of coordinated interaction between competitors.

The FTC's proposed consent order seeks to preserve competition by requiring Boehringer Ingelheim to divest the companion animal vaccines to Eli Lilly & Co. and the company's Elanco Animal Health division and the parasite control products to Bayer AG.

Boehringer and Sanofi plan to close the potential transaction in the fourth quarter, subject to appropriate regulatory approvals. Sanofi plans to use part of the net proceeds of the transaction to repurchase shares.