Sanofi-Aventis buys Merck's stake in Merial for $4 billion

Sanofi-Aventis (SNY) -- which only yesterday reported that its second-quarter profit surged 29.4 percent as net sales increased by 11.2 percent, beat estimates and raised 2009 guidance -- today announced it would purchase Merck & Co.'s (MRK) 50 percent stake in their Merial animal-health venture.

This deal has been widely anticipated, and yesterday even leaked to the press, but what wasn't known until now was the steep price. Analysts pegged the stake's worth at around two billion euros ($2.8 billion), but Sanofi is paying $4 billion on the basis of 3.0 x 2008 sales and 10.2 x 2008 earnings before interest and taxes (EBIT). Merial had sales of $2.6 billion last year.