Sanofi OTC Carve-Out Admits Two Private Equity Bidders Into Second Round

Private equity firms CD&R and PAI have been admitted to the second round for the sale of the over-the-counter consumer health division of pharmaceutical giant Sanofi, sources told Reorg. Final bids are due Sept. 30, the sources added.

The offers submitted in the first round, due July 16, came in below expectations, valuing the business at around €15 billion, the sources said. The asset is marketed off EBITDA of €1.189 billion, as reported.

Despite the deal’s large size, the bidders could afford to acquire the business without having to team up, the sources said. Owner Sanofi is likely to keep a significant minority stake, and with €6.8 billion of staple on offer from sell-side banks and another €2 billion of junior debt being arranged, the equity check for the potential buyer is likely to come at roughly €3.5 billion, a portion of which is expected to be syndicated to a private equity buyer’s limited partners, the sources said.

Other bidders that were involved in the auction earlier include Advent, which teamed up with ADIA and Mubadala, and Bain, which was bidding jointly with Cinven. Other PEs in the bidder pool were Blackstone, CVC and TPG, as reported.

Sell-side advisors Bank of America Merrill Lynch, BNP Paribas, Goldman Sachs and Morgan Stanley are offering 5.75x staple financing through an all-senior debt structure, as reported. Rothschild, which is also acting as sell-side advisor, is running a junior debt process in parallel and has taken indications from a group of junior debt providers on their ability to provide preferred equity and holdco PIK solutions to support the prospective buyout, as reported.

Sanofi is running the disposal of the business as a dual track process, with a sale and an IPO under consideration, as reported.

PAI declined to comment. Sanofi and CD&R did not reply to Reorg’s request for comment.