Sanofi-aventis and Chattem, Inc. have entered into a definitive agreement under which sanofi-aventis is to acquire 100% 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 U.S.

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 U.S. 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.

Sanofi-aventis also announced that it will seek to convert its antihistamine brand known as Allegra (fexofenadine HCl) in the U.S. from a prescription medicine to an OTC product. Upon Allegra’s conversion, Chattem will assume responsibility for the Allegra 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% of the current worldwide opportunity,” said Christopher Viehbacher, CEO 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, 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 CEO 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. Chattem will form the base of a new consumer healthcare business in the U.S. 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% premium above the closing price of Chattem’s shares on December 18, 2009 and a 44% premium above the average closing price of Chattem’s shares during the 6 months preceding the announcement of the transaction.