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In a major transaction, Sanofi-Aventis (NYSE: SNY) will acquire BMP Sunstone (NSDQ: BJGP) for $520.6 million or $10 per share. The move gives Sanofi two recognized consumer healthcare brands in China, but just as importantly, it includes Sunstone’s well-established distribution network. Sanofi, the world’s fifth largest OTC healthcare company, has stated it wants to expand in emerging markets by acquiring consumer healthcare companies, adding to its portfolio of patented drugs.

In 2007, BMP Sunstone reported $147 million of revenues, 60% of which came from consumer healthcare. For the first six months of 2010, sales climbed 11% to $79.9 and EBITDA was up 41% to $8.9 million.

In its press release, Sanofi stressed the depth of Sunstone’s sales network, pointing out that the company has relationships with retailers, county hospitals and community clinics in Tier III and Tier IV markets. Plus, BMP Sunstone has two very visible brands: Hao Wa Wa (GoodBaby), in the pediatric cough and cold space, and Kang Fu Te (Confort), in women's healthcare.

In 2007, BMP Sunstone, which had been previously known as Beijing Med-Pharm, bought Sunstone in a two-stage transaction, paying $124.7 million. The purchase transformed the company from an entity based on distribution to one that had products of its own to sell.

The Sanofi-Aventis purchase price reflects a 30% premium to BMP Sunstone's previous closing price. BMP Sunstone's board of directors has already approved the transaction, which will be structured as a merger between a Sanofi subsidiary and BMP Sunstone.

BMP Sunstone is Sanofi’s second major transaction in China’s consumer healthcare sector. In October 2009, Sanofi-Aventis entered into a JV agreement with Minsheng Pharmaceutical to form a vitamin and mineral company (see story). Minsheng’s multivitamin brand, 21 Super-Vita, is one of the largest and best-recognized names in China. Sanofi-Aventis owns a majority stake in the JV.

Sanofi, the first multination pharma to open an office in China, currently has 5,000 employees in China. Its vaccine division, Sanofi Pasteur, is a leading vaccines company in China. The company has three manufacturing plants in China, located in Beijing, Hangzhou, and Shenzhen. Three more facilities are expected to come on line in 2012.

Sanofi-Aventis has not built its own in-house R&D facility in China, preferring to take advantage of China’s life science boom through partnerships. It does, however, have two China centers, both located in Shanghai, the China R&D Center and the Asia Pacific R&D Center.

Disclosure: none.

Source: Sanofi-Aventis Acquires BMP Sunstone, Expanding Further in China