Sanofi Unveils Bond Issue Pricing


Sanofi (SNY) successfully conducted a global bond market transaction, thereby issuing notes worth $1.5 billion. Sanofi intends to utilize the proceeds from the transaction for general corporate purposes and refinancing debt. The global bond issue is registered with the US Securities and Exchange Commission (:SEC).

Sanofi offered $1.5 billion notes carrying an annualized interest rate of 1.25%. The notes will be due on Apr 10, 2018. Sanofi filed shelf registration statement with SEC on Mar 11, 2013.

Apart from the global bond issue, Sanofi was in the news recently when it announced that it has started constructing a new manufacturing facility in the Saigon High Tech Park – Ho Chi Minh City, Vietnam. Sanofi plans to invest approximately $75 million in this new plant. The new plant is expected to be fully operational by the end of 2015.

The manufacturing facility is expected to produce pharmaceuticals and consumer healthcare products with an initial capacity of 90 million units per year, which is expandable up to 150 million units.

We believe that the manufacturing facility will help Sanofi to meet the demand in Vietnam and Association of South East Asian Nations (:ASEAN) markets.

Construction, qualification and validation of the manufacturing facility are expected to commence in the third quarter of 2013. Sanofi expects the first batch of commercial grade drugs to be available in 2015.

We note that Sanofi is looking to combat the threat of genericization hanging over many of its drugs by signing deals/making acquisitions. The company’s focus on the high potential emerging markets is also impressive.

Sanofi carries a Zacks Rank #4 (Sell) in the short run. Meanwhile, stocks such as Athersys, Inc. (ATHX), Transcept Pharmaceuticals, Inc. (TSPT) and Osiris Therapeutics, Inc. (OSIR) carry a Zacks Rank #1 (Strong Buy) and are worth considering.

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