Sanofi-Aventis Buys BMP Sunstone 'To Reinforce Leadership Position in China'

 |  Includes: BJGP, SNY
by: M. E. Garza

By Patrick Crutcher

Sanofi-Aventis (NYSE: SNY) and BMP Sunstone Corporation (Nasdaq:BJGP) have entered into a definitive agreement under which SNY is to acquire all outstanding shares of BMP Sunstone for cash consideration of $10/share, or a total of approximately $520.6 million on a fully diluted basis.

The acquisition is to be structured as a merger of BMP Sunstone and a wholly-owned subsidiary of Sanofi.

The price per share represents a 30% premium above the closing price of BMP Sunstone's shares on October 27, 2010. BMP Sunstone's board of directors has unanimously approved the transaction.

BMP Sunstone achieved sales of approximately $147 million in 2009. Almost 60% of these sales were realized in the consumer healthcare segment, where BMP Sunstone has access to retailers, county hospitals and community clinics in Tier III and Tier IV markets. In this segment, BMP Sunstone has established two of China's most recognized brands: "Hao Wa Wa" (GoodBaby), recently recognized as the number one pediatric Cough & Cold brand in China, and "Kang Fu Te" (Confort) a hygiene brand for women's healthcare.

Following the recent establishment of the Hangzhou Sanofi Minsheng Consumer Healthcare joint venture, the acquisition of BMP Sunstone will make sanofi-aventis a leading consumer healthcare company in China, with a strong position in both Vitamins & Minerals Supplements and Cough & Cold, the two largest categories of this market.

"The acquisition of BMP Sunstone will not only leverage our consumer healthcare business in China, but will also bring us unique access to new expanding distribution channels which are expected to account for a third of the pharmaceutical market in China in the coming years," said Christopher A. Viehbacher, Chief Executive Officer of Sanofi-Aventis. "This transaction represents another strategic move for Sanofi-Aventis to reinforce its leadership position in China."

"This transaction offers immediate and significant value for BMP Sunstone stockholders and important benefits to our employees and customers," said Mr. David (Xiao Ying) Gao, Chief Executive Officer of BMP Sunstone. "I am excited to work with the Sanofi-Aventis team to capture the significant growth opportunities this new combination will create in the consumer healthcare market in China."

Under the terms of the merger agreement, completion of the transaction is subject to the approval of the merger by BMP Sunstone stockholders' meeting, as well as the receipt of certain regulatory approvals in China and other customary conditions. Stockholders controlling 23% of BMP Sunstone's shares on a fully diluted basis have committed to vote in favor of the transaction.

Consumer Healthcare is one of the core growth platforms identified in Sanofi-Aventis' strategy for achieving sustainable growth. Sanofi-Aventis is currently the 5th largest consumer healthcare company worldwide, and continues to expand its presence in this area through organic and external growth.

The Consumer Healthcare market in China is the second largest in the world after the United States, with an estimated size of EUR 12 bn in 2010. It has grown at a CAGR of approximately 11% since 2005, and this trend is expected to continue over the coming years driven by continued urbanization and improvement of patients' affordability, the increasing trend of self-medication and the development of pharmacy chains and expanded retail offerings of consumer healthcare products.