||:Dec 22, 2009;
Next chapter for Chattem
130-year-old firm acquired by French pharmaceutical company
By Mike Pare email@example.com
Online: Watch Zan Guerr y talk about Chattem and Sanofi-Aventis. Read previous stories. Comment.
Chattem Inc.’s acquisition by a French pharmaceutical giant will help the consumer products maker grow in the United States and internationally, go head-to-head against bigger companies and add jobs, officials said Monday.
“It’s the next chapter,” said Chattem Chairman and Chief Executive Officer Zan Guerry.
The 130-year-old Chattem, based in Chattanooga, agreed to be bought for $1.9 billion in cash by Sanofi-Aventis, the maker of pharmaceuticals such as antihistamine Allegra and heart medicine Plavix.
The CEO of Paris-based Sanofi-Aventis said in a telephone interview that Chattem will become the U.S. headquarters for its overthe-counter operations, which it hopes to grow sharply with the blockbuster purchase of Chattem.
“We felt we could get together and build something great,” said CEO Chris Viehbacher.
Sanofi-Aventis’ U.S. corporate headquarters will remain in Bridgewater, N.J., he said.
The mega-deal helped drive the broader markets higher Monday. Chattem shares soared, closing at $93.14, up $23.16, or 33.1 percent.
Sanofi-Aventis is paying $93.50 per share in cash for Chattem’s stock, a premium 34 percent above Chattem’s closing price Friday and 44 percent above the average share closing the last six months, according to the company.
Chattem’s board unanimously approved the deal, Mr. Guerry said.
He said Sanofi-Aventis approached Chattem.
“We spent a lot of time talking about the advantages and disadvantages,” he said. “It’s going to be a win for our community. We will be bigger — more jobs.”
After the deal closes early next year, Sanofi-Aventis will use Chattem as its U.S. platform in the consumer health care market. While the company, which has 100,000 employees globally, is big in Europe, Russia and Brazil, it has a relatively small presence in the United States.
Chattem, meanwhile, with brands such as Gold Bond, Selsun Blue and Act, has a wide distribution network nationwide and is seen as a keen marketer of products.
In addition, Chattem’s brands are expected to benefit from Sanofi-Aventis’ global network.
“We can take some of those brands and move into Latin America and potentially in parts of Europe and Asia,” Mr. Viehbacher said.
Analyst William Chappell of SunTrust Robinson Humphrey said Chattem will be much stronger overseas. Also, as the U.S. base for Sanofi-Aventis’ over-the-counter operations, Chattem will benefit from enhanced research and development, he said.
Chattem already is expanding its manufacturing capacity with a $35.5 million project off Broad Street already under way, Mr. Chappell said, and it makes sense for Sanofi-Aventis to centralize its distribution.
Mr. Viehbacher said plans are for the company to close a Kansas City manufacturing facility in two to three years, and it is looking for Chattanooga to manufacture products.
First, the company will shift its Allegra brand from a prescription medicine to an over-the-counter product, and Chattem will assume responsibility for that brand, though not necessarily production, officials said.
The deal “brings a lot to the table,” Mr. Guerry said. “It has tremendous growth opportunities. We’re excited about the skills, knowledge and global reach of Sanofi-Aventis.”
Both Mr. Guerry and Mr. Viehbacher said Chattem will retain its local management and autonomy. The company also will keep its name, Mr. Guerry said.