CHATTANOOGA (WRCB) -- One of Chattanooga's oldest companies is changing ownership.

The Paris-based drug maker Sanofi-Aventis will purchase Chattem for nearly $2 billion in cash.

The company has plans to convert its antihistamine brand known as Allegra from a prescription to an over the counter medication. The project was a driving factor in buying Chattem, who will spearhead the project.

Chattem officials says the company will still function under the Chattem name, and employees are safe.

"All the executive group will stay," said Chattem Vice President Robert Long, "the employees will stay in their jobs tomorrow, the next day, and the next years, so it's business as usual."

The deal is expected to be final in the first quarter of 2010.

The transaction will lead to the creation of the world's fifth largest consumer health care company.


Release posted by Chattem says current Chattem management will remain in place and its current facilities will remain open.

Also the purchase will help Sanofi-Aventis convert its antihistamine Allegra from prescription to an over the counter medication. The French drug maker does not currently have a U.S.

Here is the full statement:

PARIS and CHATTANOOGA, Tenn., Dec 21, 2009 /PRNewswire-FirstCall via COMTEX/ -- Sanofi-aventis (EURONEXT: SAN and NYSE: SNY) and Chattem, Inc. (Nasdaq: CHTT) announced today that they have entered into a definitive agreement under which sanofi-aventis is to acquire 100 percent of the outstanding shares of Chattem in a cash tender offer for $93.50 per share, or approximately $1.9 billion. The transaction will create the world's fifth-largest consumer healthcare company measured by product revenues by combining Chattem's position as a leading U.S. consumer healthcare company with sanofi-aventis' strong international presence in the sector.

Over-the-counter ("OTC") and consumer brands are core growth platforms identified in sanofi-aventis' broader strategy for achieving sustainable growth. Although the Group will generate around 1.4 billion euros worldwide in OTC sales in 2009, it has thus far not been directly present in the United States.

Chattem is approximately 130 years old and is a leading manufacturer and marketer of branded consumer healthcare products, toiletries and dietary supplements across niche market segments in the United States. Chattem has regularly demonstrated its ability to sustain regular growth, both in terms of sales and profit, through the development of its own brands and the successful integration of acquired products. Chattem's well known brands include Gold Bond(R), Icy Hot(R), ACT(R), Cortizone-10(R), Selsun Blue(R) and Unisom(R).

Sanofi-aventis also announced today that it will seek to convert its antihistamine brand known as Allegra(R) (fexofenadine HCl) in the United States from a prescription medicine to an OTC product. Allegra(R) is a well recognized brand name with both physicians and consumers. Upon Allegra(R)'s conversion, Chattem will assume responsibility for the Allegra(R) brand as part of becoming the platform for sanofi-aventis' U.S. OTC and consumer healthcare business.

"The acquisition of Chattem will be a significant milestone in sanofi-aventis' transformation strategy and will provide us with the ideal platform in the U.S. consumer healthcare market, which represents 25 percent of the current worldwide opportunity," said Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. "In addition, we believe our ability to convert prescription medicines to OTC products will be enhanced by Chattem's leading sales, marketing and distribution channels. We have great respect for Chattem's world-class management team, which has an excellent track record of sales and earnings growth based on building strong brands. With the potential access to switch products such as Allegra(R), I believe this team will take Chattem to even higher levels."

"This transaction offers immediate and significant value for Chattem's shareholders and important benefits to our employees, customers and community," said Zan Guerry, Chairman and Chief Executive Officer of Chattem. "I am excited to work with the sanofi-aventis team to capture the significant growth opportunities this combination creates, as highlighted by the planned launch of Allegra(R). Chattem will form the base of a new consumer healthcare business in the United States for sanofi-aventis, and the headquarters, manufacturing and leadership team will continue to be based in Chattanooga."

Under the terms of the agreement, sanofi-aventis will commence a tender offer for all outstanding shares of Chattem at $93.50 per share in cash. The offer price represents a 34 percent premium above the closing price of Chattem's shares on December 18, 2009 and a 44 percent premium above the average closing price of Chattem's shares during the 6 months preceding the announcement of the transaction. The tender offer is conditioned on the tender of a majority of Chattem's shares calculated on a diluted basis, as well as the receipt of certain regulatory approvals and other customary closing conditions. Following the successful completion of the tender offer, a wholly owned subsidiary of sanofi-aventis will merge with Chattem and the outstanding Chattem shares not tendered in the tender offer will be converted into the right to receive the same $ 93.50 per share in cash paid in the tender offer. The tender offer will commence in January 2010 and the companies anticipate the transaction will close in the first quarter of 2010. Chattem's Board of Directors has unanimously approved the transaction.

The transaction is expected to be accretive to sanofi-aventis' earnings as early as year one. This acquisition will allow sanofi-aventis to optimize and retain the full value of the Allegra(R) switch to an OTC product. Also, significant revenue synergies should be obtained through the expansion of Chattem's products into geographic markets where sanofi-aventis has a strong operating presence, particularly in emerging markets.

Zan Guerry and the senior leadership team of Chattem have agreed to lead sanofi-aventis' U.S. consumer health division following the close of the transaction. Additionally, sanofi-aventis is committed to Chattem's current operations and entrepreneurial spirit as it builds a sizeable presence in the U.S. consumer healthcare market. Sanofi-aventis announced it would maintain both of Chattem's existing manufacturing facilities and will continue construction on the third. The corporate brand of Chattem will also be maintained.


PARIS (AP) - French drug maker Sanofi-Aventis SA says it has agreed to buy US healthcare company Chattem Inc. for about $1.9 billion in cash in a a deal it said would create the world's fifth-largest consumer healthcare company.
      Paris-based Sanofi-Aventis says it will offer $93.50 per share to acquire 100 percent of Chattem, a Chattanooga, Tennessee based maker of consumer healthcare products such as Gold Bond skin care creams and Icy Hot pain relief medicine.
      In a statement Monday, Sanofi-Aventis said it will launch its public tender offer for Chattem in January, and it expects to complete the acquisition in the first quarter of 2010.
      (Copyright 2009 by The Associated Press.  All Rights Reserved.)