published Tuesday, December 22nd, 2009

Chattem sees new chapter of growth

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 over-the-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.

  • photo
    Staff Photo by Tim Barber Jimmie West works at her post on the Selsun Blue shampoo product line inside Plant 2 at Chattem Inc. on South Broad Street.

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.

BY THE NUMBERS

Chattem:

* Industry — Personal products

* Employees — 512 full time

* Revenues — $458 million

* Net income — $83.9 million

Sanofi-Aventis:

* Industry — Pharmaceuticals

* Employees — 15,000 (U.S.); 100,000 (global)

* Sales — $27.6 billion

* Operating income: $9.1 billion

Source: Companies, Yahoo

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.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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rolando said...

Another profit-making American company is now owned by foreign interests; more profit dollars flowing overseas and our demise flowing this direction -- which should delight the socialists among us.

Watch for job-force "reductions" and downsizing occurring in the near future as our jobs follow the money.

Foreign purchase of American companies is NEVER a good idea...unless one enjoys socialism over capitalism.

December 22, 2009 at 10:14 a.m.
Michah3 said...

The jobs are not going overseas. Aventis is keeping the manufacturing and marketing of Chattem's products in Chattanooga. The brand names will remain the same and they will still be sold under the corporate name of Chattem. Aventis does not know much about selling and marketing OTC products. They are allowing Chattem to maintain their people and autonomy. This will actually result in an uptick of jobs here in Chattanooga as more people are hired to produce and sell Allegra.

This is actually an example of capitalism by the way, not socialism...since the government doesn't own either company.

December 22, 2009 at 11:14 a.m.
signalmtnman said...

Not sure how you get socialism from this deal. In reality it is an example of global capitalism. America wanted the rest of the world the become more capitalist and now that it has and competes with America for jobs lots of scared people start screaming socialism. What is socialist about one company buying another?

December 22, 2009 at 12:42 p.m.
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