Clayton, Dubilier & Rice (CD&R) has reached an agreement with Sanofi to acquire a 50 percent controlling stake in Opella, its consumer health business.
The deal values Opella at around €16 billion: it’s one of the largest distributors of consumer health products globally with a portfolio that includes household brand names like Allegra, Doliprane, and Dulcolax.
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CD&R’s offer—around 14 times 2024E EBITDA—is binding and fully financed, according to Sanofi. The firm’s package was preferred to competing interest from PAI Partners, even after a last-minute sweetener.
Sanofi disclosed that PAI submitted a €200 million improvement to its bid on Thursday, but told shareholders it was surprised to receive the improved proposal after the process’ deadline had passed.
PAI might have sensed that there was room for differentiation on terms other than headline value.
In recent weeks, both sides of the French political aisle have raised strong objections to the Opella sale, which they say will harm employees and introduces risk from foreign ownership of a major national healthcare asset. French labor unions also issued calls last week for Sanofi employees to strike in a show of their opposition to the deal.
Alongside the increase in value, PAI’s improved offer included explicit promises to preserve and even expand Opella’s domestic manufacturing footprint and keep the company’s headquarters in France.
In the end, those assurances turned out not to be a differentiator.
On Sunday evening, Finance Minister Antoine Armand said that the French Government had obtained guarantees from Sanofi and CD&R covering its demands for Opella’s go-forward domestic employment, production, and investment. This includes a commitment that no French manufacturing facilities will be closed.
To further mitigate concerns over foreign private equity ownership, French state investment bank Bpifrance will take a minority stake of around 2 percent in Opella as part of the deal.
France has developed a reputation for challenging business and regulatory environments, but CD&R has long been active in the country.
In 2016, the firm acquired French home furniture retailer BUT (now Mobilux) and completed subsequent add-ons. As recently as July, CD&R partnered with Permira on a proposed $2.4 billion take-private of French cybersecurity provider Exclusive Networks SA.
For Sanofi, the partial divestiture (the outcome of a plan announced more than a year ago) follows similar actions by other major pharmaceutical businesses, including GSK’s spin-off of Haleon and Johnson & Johnson’s separation of Kenvue.
Kenvue made headlines of its own today following a Wall Street Journal report that the company is the subject of a new activist campaign from Starboard Value.
Kenvue launched its separate listing last May and ended its first day of trading at a price of $27 per share. Shares have since fallen to $21.72 as of Friday’s close, compared to a gain of more than 40 percent for the S&P500 over the same period.
Starboard founder and Chief Executive Jeff Smith is expected to outline the firm’s Kenvue thesis on Tuesday when he’s scheduled to speak at the 13D Monitor Active-Passive Investor Summit in New York.