Sanofi’s Ablynx acquisition announcement
On January 29, 2018, Sanofi (SNY) announced its acquisition of Ablynx (ABLX), a Belgium-based biopharmaceutical company, for 45 euros per Ablynx share, amounting to a total of 3.9 billion euros (or $4.8 billion) in cash.
As per the agreement, Sanofi will acquire all outstanding Ablynx ordinary shares, including American depositary shares, warrants, and convertible bonds. The deal was unanimously approved by the boards of directors of both Sanofi and Ablynx. This was the second acquisition deal made by Sanofi within a week. As we discussed in the previous articles in this series, Sanofi entered into an agreement to acquire Bioverativ on January 22, 2018.
Ablynx was also being pursued by Novo Nordisk (NVO), which offered 2.6 billion euros for the acquisition. However, Sanofi outbid Novo Nordisk.
On January 29, 2018, SNY registered a rise in its stock price and bounced back from the 52-month low it touched on January 22, 2018, after it announced its acquisition of Bioverativ. The VanEck Vectors Pharmaceutical ETF (PPH) holds ~4.5% of its total portfolio in SNY stock.
Deal terms and financial highlights
Sanofi plans to launch a public offer to acquire all outstanding shares of Ablynx by the beginning of 2Q18. BNP Paribas Fortis is acting as the sole credit facility arranger for Sanofi, and according to the Belgian requirement of certainty of funds, the company has entered into a bank credit facility with BNP Paribas Fortis. The company expects the cost of debt to be ~1%. The deal is expected to close by the end of 2Q18.
The company expects the acquisition of Ablynx to be neutral to its business EPS (earnings per share) in 2018 and 2019 on top of its R&D (research and development) expenses. Sanofi also expects to benefit from the intellectual property tax structure available on an R&D tax credit in Belgium.
Morgan Stanley (MS) and Lazard are the financial advisers to Sanofi, while J.P. Morgan is the financial adviser to Ablynx. The legal counsel for Sanofi is Weil, Gotshal & Manges LLP. The legal counsels for Ablynx are Eubelius CVBA, Goodwin Procter LLP, and Linklaters LLP.
Next, we’ll take a look at the existing partnership between Sanofi and Ablynx.