Sanofi-Aventis will buy Merck‘s 50% interest in the companies’ animal health joint venture, Merial Limited, for $4 billion in cash. The price values Merial at 3 times its 2008 sales and 10.2 times itsearnings before interest and taxes (EBIT).

In addition to the Merial agreement, Merck, SA and Schering-Plough announced the signing of a call option agreement. Following the closing of the Merck/Schering-Plough merger, SA will have the option to combine the Intervet/Schering-Plough Animal Health business with Merial to form an animal health joint venture that would be owned equally by the new Merck and SA.

“These agreements should enable us to proceed expeditiously with the closing of our merger with Schering-Plough in the fourth quarter as planned, and also gain an outstanding animal health business through Intervet/Schering-Plough Animal Health,” said Richard T. Clark, Merck’s chairman, president and chief executive officer. “We are pleased that our long-time partner Sanofi-Aventis will purchase Merck’s interest in Merial, the successful joint venture we built together,” he added. “We look forward to the potential opportunity to bring together the strong animal health businesses of sanofi-aventis and the new Merck.”

Christopher A. Viehbacher, chief executive officer of SA, remarked, “We are pleased with the acquisition of Merial, a major global player in animal heath, and the possibility of combining Merial and Intervet/Schering-Plough’s complementary businesses. The combination would create a new leader in this $19 billion global animal health market, supporting our vision of a global diversified healthcare leader. In an environment of increasing complexity, I am convinced that alliances have an important place and I look forward to the prospect of further partnering with the new Merck in animal health to build on our longstanding relationship.”

The sale of Merck’s interest in the Merial joint venture is subject to clearance by the European antitrust authorities.

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