UPDATE 2-Sanofi nears deal for Merck's Merial stake-source

(Updates talks, likely price; previous dateline LONDON/PARIS)

PHILADELPHIA, July 29 (Reuters) - French drugmaker Sanofi-Aventis (SASY.PA) is "close" to reaching a deal to buy Merck & Co Inc's (MRK.N) half-stake in their shared Merial animal-health business, a source familiar with the matter said on Wednesday.

Ongoing discussions between the two drugmakers value Merck's stake in Merial at about $4 billion, the source said.

Merck aims in coming months to buy U.S. rival Schering-Plough Corp SGP.N and the companies must divest some overlapping assets in the animal health sector to win regulatory approval for their planned $41 billion merger. Their products include medicines for livestock and household pets.

Sanofi Chief Executive Chris Viehbacher in April said he was open to buying Merck's stake in Merial. Earlier on Wednesday, he repeated that he preferred to refer questions to Merck about the matter: "You have to ask Merck about the timing of the decision."

Merck spokeswoman Amy Rose on Wednesday declined to comment on the reports, saying her company continues to weigh its overall options regarding its animal health business.

She said possible options include selling its Merial stake or a sale of Schering-Plough's animal health business.

"We will communicate our decision at the appropriate time," Rose said.

Since Merck's announced its planned takeover of Schering Plough, Sanofi has been widely seen as being in pole position to buy the stake, as it looks to diversify its business to help offset a looming loss in drug sales due to patent expirations. [ID:nN24483117]

Sanofi on Wednesday reported better than expected second-quarter earnings and raised its profit-growth goal for the year. It outlined new cost savings to help it cope with the effect on profit of patent expiries on a number of its top drugs. [ID:nLT334165] (Reporting by Jessica Hall with additional reporting by Quentin Webb in London, Caroline Jacobs in Paris, Lewis Krauskopf and Ransdell Pierson in New York; Editing by Greg Mahlich and Simon Jessop)