Sanofi entered a fresh round of exclusive negotiations to sell control of its consumer health unit to Clayton Dubilier & Rice after the French government secured social commitments and agreed to take a minority stake.

The talks would see Sanofi transfer a 50% controlling share of its Opella business to the US buyout firm, according to a statement on Monday, giving it an enterprise value of about €16 billion (US$17.4 billion or RM74.7 billion). 

The renewed negotiations come after CD&R agreed to pledges around local jobs, investments and production, Bloomberg reported earlier. Sanofi encountered a backlash in France when it chose the US firm over a French rival as the front runner to acquire the maker of Doliprane painkiller earlier this month.

State-owned investment firm Bpifrance will spend between €100 million and €150 million for a stake of 1% to 2% in Opella, Nicolas Dufourcq, the chief executive officer of BPIfrance, said at a press conference on Monday morning

“We will be on the board of this company,” Dufourcq said. “And when Bpifrance is on a company board, it’s vocal, active, and sometimes activist if necessary.” 

French Finance Minister Antoine Armand said the proposed agreement calls for €70 million to be invested in France, and includes sanctions in case the companies don’t meet their agreements.

Sanofi’s shares traded 0.7% lower early on Monday in Paris. The stock has risen about 2% over the past 12 months. 

The French government will now formally examine the proposed sale of Opella, as it involves foreign investment. Similar deals have in the past been subject to particular conditions or even vetoed completely. A bid by Canada’s Alimentation Couche-Tard Inc for supermarket chain Carrefour SA was blocked in 2021. Teledyne Technologies Inc’s purchase of Photonis, a company that makes night-vision gear for the military, also failed to win endorsement.

In the proposed sale of Opella, CD&R prevailed over French rival PAI Partners. After the US firm and Sanofi entered a previous round of exclusive talks, PAI submitted an improved offer, according to people familiar with the matter.

If all goes ahead as envisioned, the Sanofi deal is expected to close in the second quarter of next year at the earliest. The pharmaceutical company also said it will upgrade its 2024 earnings guidance.

Details of what the sale proceeds will be used for have not yet been set out, with Sanofi inficating that this would be in line with its capital-allocation priorities. A share buyback is likely, Jefferies analyst Peter Welford said in a note. 

Selling the unit that makes Doliprane, the most-used drug in France, will allow Sanofi to focus on pharma innovation, CEO Paul Hudson has said. Sanofi will join peers including GSK plc and Novartis AG that have split off their consumer health divisions in recent years. 

  - Bloomberg