Sanofi plans to sell its equity investment in Regeneron; confirms no change to ongoing collaboration
Paris: Sanofi has announced its intent to sell its equity investment in Regeneron through a registered public offering and related share repurchase by Regeneron. The registered offering and share repurchase will have no impact on the ongoing collaboration between Sanofi and Regeneron.
A preliminary prospectus supplement relating to the offering of Regeneron's shares will be filed with the U.S. Securities and Exchange Commission. Sanofi currently holds approximately 23.2 million shares of Regeneron's common stock, representing approximately 20.6% ownership.
Regeneron has agreed to repurchase $5 billion of its stock from Sanofi conditional on completion of the proposed public offering. If the offering and repurchase are completed and the underwriters fully exercise their option to purchase additional shares1, Sanofi will continue to own approximately 400,000 shares of Regeneron's common stock, which Sanofi is retaining in support of the ongoing collaboration with Regeneron.
"Sanofi and Regeneron's collaboration has been one of the most productive in the industry, creating significant value for both companies but more importantly, resulting in five important medicines for patients. Sanofi remains committed to continuing our collaboration with Regeneron which remains an integral part of our overall strategy, and this decision was fully aligned with Regeneron, said Paul Hudson, Chief Executive Officer, Sanofi. "The decision to divest our holdings is consistent with our efforts to enhance value creation for our shareholders. We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth."
Following completion of the proposed public offering and share repurchase, Sanofi will discontinue accounting for its ownership in Regeneron's common shares under the equity method. After restatement of Sanofi previously reported non-GAAP indicator (Business Net Income) and change of its definition to exclude the effect of equity method accounting for Regeneron investment, Sanofi business EPS is expected to grow by approximately +5% in 2020 at constant exchange rate compared to 2019 restated business EPS of €5.64, which is in line with Sanofi's 2020 business EPS growth guidance.
The Companies have had a successful and long-standing clinical and commercial collaboration dating back to 2003 that has resulted in five approved treatments to date with additional candidates currently in clinical development. Sanofi originally purchased a shareholding in Regeneron in 2004. Sanofi's decision to sell its Regeneron common shares was made in consultation with Regeneron and the contemplated structure will allow both companies to achieve their mutual objectives.
The transaction has been approved by Sanofi and Regeneron's Boards of Directors.
The public offering will occur simultaneously in the United States and internationally through underwriters led by BofA Securities and Goldman Sachs as joint book-running managers.