Sanofi, a global leader in healthcare based in Paris, is realigning its business strategy by selling a 50% stake in its Consumer Healthcare division, Opella, to private equity firm Clayton, Dubilier & Rice (CD&R). This €16 billion transaction will enable Sanofi to focus on its core business areas while leveraging CD&R’s expertise to enhance Opella's market position and drive significant growth. The deal, anticipated to close in Q2 2025, marks a pivotal shift for the company towards the optimization of long-term strategic and financial goals.

Sanofi & Opella Overview

Sanofi, headquartered in Paris, is a leading global healthcare company employing approximately 90,000 individuals. Though its 3 core divisions, the company specializes in the development, manufacturing, and marketing of pharmaceuticals, vaccines, and consumer healthcare products. Its Pharmaceuticals division focuses on specialty care areas such as immunology, oncology, and rare diseases, with notable products like Dupixent. The Consumer Healthcare division, managed through its standalone business Opella, offers a range of over-the-counter products (products that can be sold to the public without prescription) addressing common health needs. Lastly Sanofi Pasteur, the Vaccines division, is a global leader in immunizations, utilizing advanced technologies such as mRNA to tackle critical and emerging health challenges.

Regarding the overall financials, Sanofi reported revenues of €43.07 billion in 2023, a flat print compared to the €42.99 billion in 2022. Consensus estimates indicate continued growth, with revenues expected to reach €46.53 billion in 2024 and €49.58 billion in 2025. Earnings Before Interest and Taxes (EBIT) decreased from €10.03 billion in 2022 to €9.18 billion in 2023 but are projected to rebound to €12.29 billion in 2024 and €13.69 billion in 2025. This anticipated recovery aligns with a projected rise in EBIT margin from 23.33% in 2022 to 27.61% in 2025, reflecting improved cost management. Free Cash Flow (FCF) improved modestly from €8.32 billion in 2022 to €8.54 billion in 2023, with a temporary dip expected in 2024 due to increased capital investments. Sanofi’s long-term debt decreased from €16.76 billion in 2022 to €16.10 billion in 2023, demonstrating effective leverage management. Earnings per share (EPS) dropped from €6.66 in 2022 to €4.30 in 2023, but are projected to rebound to €8.68 by 2025, indicating recovering profitability. Correspondingly, Return on Equity (ROE) is expected to rise from 11.67% in 2022 to 13.05% in 2025, reflecting improved efficiency in generating shareholder returns.

Among the main divisions of Sanofi in this article we will focus on Opella, the Consumer Healthcare division, which is the one being acquired by CD&R. Headquartered in France, Opella employs over 11,000 individuals and has a presence in 100 countries, supported by 13 strategic manufacturing sites and 4 science and innovation development centers. The business boasts a portfolio of iconic brands, including Allegra, Doliprane, and Dulcolax, making it the third-largest entity globally in the over-the-counter (OTC) market, with a focus on vitamins, minerals, and supplements (VMS). Serving more than half a billion consumers worldwide, Opella operates in a fast-growing industry driven by sustainable long-term trends such as: aging population, rising income levels, and enhanced health and well-being awareness.

Clayton, Dubilier & Rice (CD&R) Overview

Clayton, Dubilier & Rice LLC (CD&R), founded in 1978, is a private equity firm headquartered in New York City. The firm focuses on the investment in middle-market companies globally, targeting specific sectors such as consumer products, healthcare, industrials, business & financial services, and technology. CD&R provides equity financing for acquisitions, carve-outs, buyouts, and growth capital transactions, working closely with management teams to drive operational improvements and strategic growth. As of 2024, CD&R manages approximately $80.13 billion in assets across eight active funds, with an average fund size of $12.65 billion. The firm's portfolio consists of 50 active investments, emphasizing partnerships through buyouts and corporate collaborations. CD&R primarily targets companies in the United States and Western Europe, focusing on value creation through operational efficiencies and strategic “buy and build”. Its exit strategies prominently include strategic M&A (44.8%) and initial public offerings (32.8%).
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In its recent activity within the healthcare sector, CD&R has made significant strategic acquisitions. In August 2022, CD&R acquired a 60% stake in Gentiva Health Services, the Hospice and Personal Care division of Humana’s Kindred at Home subsidiary, in a deal valued at $3.4 billion. Earlier, in February 2022, Vera Whole Health, a portfolio company of CD&R, acquired Castlight Health for $335 million in cash. Additionally, in April 2021, Cynosure, another CD&R portfolio company, acquired MyEllevate for an undisclosed amount. These strategic moves underscore CD&R’s focus on expanding its healthcare portfolio and leveraging opportunities in patient care and health technology.

Deal Structure
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Clayton, Dubilier & Rice (CD&R) financed the €16 billion acquisition of a 50% stake in Sanofi’s Consumer Healthcare division – Opella – using a combination of equity from CD&R and its investment partners, along with euro- and dollar-denominated loans and bond financing, totaling €8.65 billion. Seven key lenders (including Barclays Plc, BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, and Société Générale SA) were designated as global coordinators. The financing included a €5.45 billion Term Loan B (senior credit facility), split between euro and dollar tranches, with interest rates set at 350 basis points over Euribor for the euro portion and 325 basis points over SOFR for the U.S. dollar portion. Additionally, there was a €2 billion bridge to high-yield bond financing, capped at 7.5% for euro bonds and 8.5% for dollar bonds, as well as a €1.2 billion revolving credit facility. Moreover, CD&R opted out of more than €1 billion in back leverage offered by banks and instead secured a payment-in-kind loan from private credit funds.

Deal Rationale

The strategic and financial rationale behind Sanofi's decision to sell a controlling stake in Opella to Clayton, Dubilier & Rice (CD&R) is multifaceted, and depends on the side of the transaction and the different nature of the players involved:

Unlocking Value for Sanofi:

In December 2019, Sanofi launched their ‘Play to Win’ strategy under its new CEO Paul Hudson. During his tenure, Sanofi shifted its goals towards increasing investments in its pipeline to realize long-term growth, the launch of strategic cost initiatives to reallocate funds to innovative growth drivers, and the announced intention to separate the Consumer Healthcare business. In an effort to address Sanofi’s challenges in low R&D productivity, leadership hoped this pivotal chance would lead Sanofi to significant performance improvements.

Sanofi’s business operations are broken into four units: Speciality Care, Vaccines, General Medicine, and Consumer Healthcare (through Opella). The biopharma business of Sanofi, covering pharmaceuticals and vaccines, contributed nearly 87.8% of Sanofi’s FY23 total revenue. Considering how much of the business relies on this category, leadership wants to focus on just this core innovative business. In contrast, the Consumer Healthcare unit contributed about 12.2% of FY23 revenue. Opella, producing and marketing self-care brands and over-the-counter medicines, is a business with intrinsically lower margins due to the presence of generic medicine competition and lower barriers to entry.

Sanofi’s decision to sell off their Consumer Healthcare business follows the rest of the pharmaceutical industry’s efforts in removing their lower growth, lower margin, and off-patent businesses so that they may instead focus their attention and capital on their core innovative divisions. Recent spin-off deals include Johnson & Johnson’s public spin-off of Consumer Healthcare business Kenvue Inc. in 2023, Novartis’ public spin-off of generic/biosimilar business Sandoz in 2023, GSK’s public spin-off of Consumer Healthcare business Haleon Plc in 2022, and UCB Pharma’s recent sale of their mature (ie. off-patent) China business to private equity firm CBC group in 2024.

Therefore, Sanofi’s sale of a 50% stake in Opella to CD&R creates an attractive opportunity to raise funds, improve efficiency, and free up resources that can be applied wholeheartedly in boosting R&D efforts in their high-growth and high-risk divisions within specialty care, vaccines, and general medicine. Additionally, it is important to note that Sanofi initially considered a public spin-off of Opella back in December 2019 during the launch of their ‘Play to Win’ strategy. However, Sanofi’s choice to instead opt for a 50% sale reflects their desire to still benefit from any upside opportunities they could receive from their Consumer Healthcare business and avoid any unnecessary risks and expenses associated with a full public spin-off.

Attractive Opportunity for CD&R:

Although Opella may naturally be a lower margin business, this doesn’t mean it is a bad business at all. First of all, Opella can leverage a strong portfolio of well-known brands such as Doliprane, Dulcolax, EVE, Allegra, IcyHot.

Moreover, the business models of traditional pharmaceuticals substantially differ from the business models of consumer healthcare pharmaceuticals. Traditional pharmaceuticals are a very risky, R&D capital intensive business that relies much more on regulatory patent protection for the duration of their patented medicine to protect their market position as they make sales. In contrast, consumer healthcare products, without the same level of patent protection, rely on traditional marketing strategies to vie for consumer attention on store shelves. In turn, it is also much easier for consumer healthcare products to adapt quickly and dynamically to the market. As a result, even though these medicines may go off patent, they can still retain strong market share with the use of strong marketing and sales strategies. To this extent, Opella’s strong portfolio of well-recognized brands positions the company as a high-quality business with very strong, predictable cash flows that make it very attractive to private equity investors.
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Furthermore, under private equity ownership, there are strong opportunities to improve the business. By operating more independently, Opella wouldn’t compete internally with Sanofi for attention and resources and thus be able to focus efforts on entirely improving Opella’s key products and improve the business as a whole. There may also be opportunities to develop innovative platforms around Opella’s successful products, in order to build upon the brand’s value or expand into new geographics with underserved markets. All in all, the consumer health industry is a fast-growing segment consistent with rising wave of key secular trends, such as an aging global population, rising income levels, and greater awareness for health and well-being that Opella could be able to serve better thanks to CD&R operational expertise.

Market & Government Reaction

The market has reacted somewhat sourly to Sanofi since the deal was announced on October 21, 2024 primarily due to investor concerns regarding uncertainty around the deal. 

Year to date, Sanofi’s stock has been making a recovery after they announced reduced guidance a year ago and were since making steady wins from success with their pipeline and sales growth of their blockbuster anti-inflammatory injection drug Dupixent. However, this stock improvement has turned around, coming down more than 8% since CD&R emerged as a potential buyer in mid-September. Investor concerns primarily revolve around the uncertainty of the deal closing and the risks stemming from its unique political implications.

As a matter of fact, Opella sells over-the-counter treatments, including Allegra, Dulcolax, and Doliprane. Doliprane is especially relevant because it is an extremely popular pain reliever in France with the same active ingredient as Tylenol, a common household item to most people’s medicine cabinets. Because of Opella's strong ties to France and French population, the decision of Sanofi to sell the division to an American private equity firm has been complicated and contrasted by the intervention of public authorities. Empirically, France has previously blocked foreign firms from taking over domestic companies. Additional concerns over the loss of French jobs also complicated matters. To resolve this, the French government has negotiated with CD&R and Sanofi to allow the deal to pass contingent on keeping certain production sites and jobs in France along with penalties if these clauses are broken. Additionally, to further align incentives, Bpifrance, an investment bank owned by the French government, will own about 2% of Opella, and will have a voting seat on its board of directors to monitor Opella.
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Thus, although the French government has seemingly allowed the deal to go forward, investors still seem somewhat uncertain as they look forward to the deal closing, anticipated in Q2 2025 at the earliest. However, in the long-term, the impact of the deal is expected to be positive for both Sanofi and Opella. Sanofi expects the sale of a 50% stake in Opella to pave the way for further focused attention on innovative medicines and vaccines. Plus, by retaining a stake in Opella, Sanofi will be able to participate in supporting Opella’s growth strategy and upside opportunities. On the other hand, CD&R also expects the deal to be successful by leveraging Opella’s worldwide presence in a fast-growing industry with attractive, sustainable long-term trends. CD&R has reported themselves their experience in investing in Europe and their experience building successful French businesses including partnerships with, and investments in, Rexel, Spie, BUT-Conforama and Socotec.

Advisors and deal closing
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Advisors are not disclosed. But based on current public articles, Citi and Lazard were buy-side advisors to CD&R and the sell-side advisor is not disclosed. The deal is expected to close in Q2 2025 at the earliest.

​Public Comparables analysis

​To grasp the company’s valuation, a group of five comparable companies were chosen by similar financials, all specializing in consumer healthcare (CHC), the focus of Sanofi’s divestment. The companies have roughly similar top-line margins and capture the global diversification of Sanofi’s CHC division sales, where rest of the world takes up the largest share.
Opella’s portfolio is known for wide-ranging products, tackling a multitude of problems, including but not limited to pain relief, digestive wellness, allergy relief, physical and mental wellness, respiratory health and others. The chosen comparables also address the target’s portfolio: Kenvue (formerly part of Johnson & Johnson) also target pain and allergy relief among others, Haleon’s, Hikma Pharmaceutical’s and Perrigo’s portfolio addresses respiratory health, digestive wellness and allergy relief, Bausch Health Companies focuses more on digestive wellness alongside other products.

Figure 1: Selected comparable transactions (Source: Factset)

​Considering the annual reports of the provided comparable companies and short-term projections, a public comparable analysis was constructed to place Sanofi’s transaction in the context of its peers.

​Looking at the group, companies with higher sales figures, Kenvue and Haleon, as well as the highest potential for growth in the coming years, Perrigo, are rewarded with higher valuations, reaching multiples up to 16.1x for Haleon. The remaining few companies have lower margins and/or lower sales figures. Kenvue is a former part of Johnson & Johnson, whereas Haleon is a JV of GSK and Pfizer that was listed in 2021. Both companies after gaining more autonomy from their parent companies are expecting or already seeing some improvements within their financials, contributing to higher multiples, which could be the case in the future for Opella if synergies are successfully exploited by CD&R.

Given the group of comparables, the average EV/EBITDA for current FY stands at 12.0x, implying a €17.3bn valuation, which is €1.8bn higher than the given valuation of the company after CD&R acquisition (€15.5bn). The median EV/EBITDA stands at 12.2x, very similar to that of the mean; however, the discrepancy between the mean and median increases with time, given the accelerated decline of Perrigo’s multiples in comparison to other companies, due to significantly higher EBITDA projections for years to come. These FY valuations imply that Sanofi’s CHC division was undervalued in the face of its peers; however, alongside its peers, CHC division’s current growth has stagnated, and sales are towards the lower end of the spectrum of comparables.

Taking into consideration all of the FYs of the comparables and taking their averages, the implied valuation for Sanofi’s CHC division over the years is €16bn and €14.7bn by mean and median respectively. This places CD&R’s acquisition’s implied valuation of Opella within this range, implying a fair price tag for the company.
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Sanofi has been planning to divest from Opella for a year now to focus on one division instead of trying to manage two divisions with very different strategies. It still will maintain a part of it, but selling a 50% stake enables Opella to continue growing and further innovate, what it might not have done under Sanofi. The past few years Opella’s performance has stagnated and selling off the division could enable the company to further improve its margins and sales volume, increasing its valuation against its peers. However, provided the current performance of the division, a 10.8x EV/EBITDA multiple seems reasonable, placing it below the median of companies, but still with a very big potential to innovate and grow under new leadership.

Past transactions analysis

Figure 2: Selected past transactions (Source: Factset

​We have chosen to include a Past Transactions Analysis in our evaluation to increase the level of accuracy in the research. ​In the past few years there have been some major operations in the healthcare industry. To assess the rationale of Opella’s valuation by CD&R we studied large transactions by big players in the market.

As transaction multiples often include premiums reflecting anticipated synergies, it is useful to analyse comparable transactions in the healthcare and medical specialties sectors to evaluate if CD&R has paid a reasonable price for Opella. Given the trend in the healthcare industry, numerous acquisitions have been completed in the last few years, with major strategic players driving competition for valuable assets.

To evaluate the appropriateness of CD&R’s pricing, we studied recent large healthcare transactions involving strategic buyers, focusing on deals where acquirers expected strategic advantages. The analysis of these precedent transactions reveals that the average EV/Sales multiple is 20.7x, with a median of 15.6x. By applying these multiples to Opella, CD&R’s transaction at $8bn implies a relatively high valuation if the standalone revenue multiple is lower.

However, the EV/EBITDA multiple often gives a more accurate picture, accounting for operational cash flows and efficiency potential. The average EV/EBITDA multiple is 29.7x, while the median is 27.8x. These figures reflect the industry’s general willingness to pay a premium for EBITDA-generating companies. If Opella’s EBITDA multiple aligns with or falls below this benchmark, it suggests a valuation in line with market norms. However, Opella’s EV/EBITDA is 10.8x which means that the company may have been undervalued compared to the market benchmark.
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To conclude, it can be stated that CD&R’s valuation of Opella is justifiable from a market standpoint. Nonetheless, Opella’s EV/Sales and EV/EBITDA multiples are way lower than the past transactions benchmark and this could mean that the private equity firm has been able to secure a favourable deal.

Figure 3: EV/EBITDA multiples of selected transactions (Source: Factset

Conclusion
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The acquisition of a 50% stake in Opella by Clayton, Dubilier & Rice reflects the firm's commitment in expanding its influence in the consumer healthcare sector. The analysis of public comparables and past transactions suggests that CD&R's valuation of Opella falls below recent industry multiples, indicating a favorable acquisition price. Ultimately, the deal’s success will depend on CD&R's ability to drive Opella's growth independently and capitalize on its strong market position by riding effectively the underpinning secular trends.

​By Rishav Kumar, Vasara Silininkaite, Thomas Agosti, Alessandro Cera

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​Sources

• Factset
• Sanofi website, investor presentation
• Clayton Dubilier & Rice website, press release
• Yahoo Finance
• Bloomberg
• Forbes
• Biopharmadive
• WSJ
• Financial Times
• Sanofi website, financial statements
• Sanofi website, press release
• Reuters