French pharmaceutical giant Sanofi-Aventis and US group Merck announced on Tuesday they would join forces to create the world's biggest animal health company.
The companies will own an equal share in the joint venture, which will combine Sanofi-Aventis's Merial unit with Merck's Intervet/Schering-Plough, they said in a statement.
The combined business would hold 29 percent of the market with sales of about 5.3 billion dollars (3.9 billion euros), making it the leader in the sector ahead of US rival Pfizer's animal health unit Fort Dodge.
Merck said the animal health market was expected to grow at around five percent per year thanks to an increasing demand for animal proteins and strong demand from consumers for health care for their pets.
"The upcoming combination of Merial and Intervet/Schering-Plough is an exciting opportunity for Sanofi-Aventis to create with Merck a leading company in the Animal Health strategic and growing sector," Sanofi-Aventis Christopher Viehbacher said in a statement.
Sanofi-Aventis decided to exercise its option to merge its animal health division with Merck's unit. The option has been available since July 29 when Sanofi-Aventis bought Merck's stake in Merial for four billion dollars.
The companies said the transaction should be completed in the next 12 months after it is vetted by US and European regulatory authorities.
The deal will cost the French group one billion dollars -- a payment of 250 million dollars to Merck and 750 million dollars under the terms of the July 2009 agreement, the companies said.
"Merck has been in the animal health business for well over six decades and through this new joint venture, we will bolster our diverse portfolio and create a new global competitor poised for growth," Merck chief executive Richard Clark said in a statement.
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