Sanofi (SNY) recently announced that it will divest its 19.3% stake (both direct and indirect) in the Yves Rocher Group. Sanofi will sell its stake to Société Financière des Laboratoires de Cosmétologie Yves Rocher, which currently owns more than 75% of Yves Rocher Group.
After completion of the divestment, Société Financière des Laboratoires de Cosmétologie Yves Rocher will own more than 95% of the Yves Rocher Group. The divestment is expected to be complete by the third quarter of 2012, subject to certain closing conditions. We note that financial details of this transaction were not disclosed.
Yves Rocher Group is a multinational company with a presence in the cosmetics, home care products and clothing sectors. Key brands of the company include Yves Rocher, Petit Bateau, Stanhome, Dr Pierre Ricaud, Daniel Jouvance, Kiotis and ID Parfums. Yves Rocher Group generated sales of more than €2 million in 2011.
Sanofi had a stake in Yves Rocher Group since 1973. Sanofi divested a part of its Yves Rocher Group holding in the early 2000s.
Sanofi’s biggest challenge is the generic threat being faced by several of its products. The company lost approximately €2.2 billion in sales in 2011 due to genericization.
Sanofi is looking to combat the generic threat through inorganic growth, introduction of new products and streamlining its operations. We believe the recent divestment of Yves Rocher Group reflects the company’s intention to focus on its core areas. The company is currently focusing on the health care segment and has identified seven growth platforms, which include diabetes solutions, human vaccines, innovative drugs, consumer healthcare, emerging markets, animal health and new Genzyme.
We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
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