* Chairman Weinberg cites poor relations between CEO, board
* Weinberg takes over CEO role until successor found
* Says already had contacts with potential candidates
* Sanofi board says not changing company's strategy
* Shares fall 4 percent, 17 bln euros wiped off in 3 days
(Adds chairman comments, possible successor, updates shares)
By Natalie Huet and Noëlle Mennella
PARIS, Oct 29 Sanofi's board ousted
its chief executive of six years on Wednesday, criticising him
for an authoritarian management style that was often popular
with investors as he lifted the French drugmaker onto the global
Shares in France's second-biggest listed company, battered
by days of uncertainty over the future of CEO Chris Viehbacher
and a warning over slowing growth at its key diabetes business,
fell a further 4 percent in afternoon trade.
That took their decline over the past three days to more
than 15 percent, wiping almost 17 billion euros ($22 billion)
from the company's market value -- or more than the entire
market capitalisation of French carmaker Renault.
Sanofi said it would continue the international expansion
pursued under Viehbacher, blaming his dismissal on his lack of
communication with the board and poor execution of his strategy.
But Chairman Serge Weinberg did not explain what had gone
wrong in the diabetes field and told analysts they would not be
getting detailed financial guidance for 2015 before annual
results in February, leaving investors in the dark.
Weinberg added no further changes in the executive
management team were planned and that Sanofi was "deeply
committed" to being an international company -- an attempt to
allay analysts' fears the company may become more insular.
Some were not convinced, however. "Viehbacher tried hard to
change the DNA of the company but the board won in the end.
Sanofi will become more parochial now," said Navid Malik, head
of life sciences research at Cenkos Securities in London.
Sanofi said Weinberg would take on the CEO role until a
replacement for the German-Canadian Viehbacher was found.
Weinberg said there had already been contacts with potential
candidates in the pharmaceutical industry, and nationality would
not be a factor. "We want to choose the best possible boss for
Sanofi, so we'll take the time that's needed," he said, adding
the board would strive to go "as fast as possible".
Given Sanofi's range of businesses -- encompassing biotech
drugs, vaccines, generics, consumer and animal health -- finding
an executive with the right experience may not be easy.
Leerink analyst Seamus Fernandez said Bernard Poussot, the
former boss of Wyeth who was schooled in Paris, could be a good
choice if he was willing to come out of retirement.
Sanofi's first non-French boss, Viehbacher transformed a
national champion into a global business, largely due to the $20
billion acquisition of U.S. biotech and rare diseases company
Genzyme in 2011, which tipped the enlarged group's centre of
gravity away from Paris and towards Boston.
But his straight-talking and sometimes brusque management
style raised the hackles of trade unions, and a source close to
the board told Reuters this week that it was unhappy at the lack
of communication from an "authoritarian, solitary, secret" CEO.
Viehbacher did not inform the board when he recently oversaw
a review of what to do with an $8 billion portfolio of
off-patent drugs in Europe, most of which are produced in
France. The options studied leaked to the press and fired up
Weinberg said the company's 15-strong board was unanimous in
its decision to remove Viehbacher. He also cited problems with
Viehbacher's execution of group strategy, pointing to inventory
problems in Brazil last year, a slowdown of sales in China and
Tuesday's warning on its diabetes business.
The fact Viehbacher moved to Boston in June did not help
relations improve, but his change of residence was not the root
of the dispute, one source close to the board said.
Uncertainty over Viehbacher's role first surfaced on Monday
with the publication of a Sept. 4 letter he sent to the board
asking for clarity about his position.
Weinberg said he'd had regular contacts with "big
shareholders," who shared his concerns over strategy execution.
French cosmetics group L'Oreal is Sanofi's largest
shareholder, with a stake of 9 percent. Officials at the company
did not reply to requests for comment.
Sanofi's chairman said the group's U.S. sales force in
diabetes had not been well managed, but didn't elaborate.
Some investors were disappointed the firm did not set out a
plan on Tuesday to offset problems at its diabetes unit with
cost cuts. However, Citi analyst Peter Verdult said scope for
significant cuts were limited by the need to invest in the new
It is also difficult for Sanofi to cut its domestic cost
base in France, due to strict French labour laws. Weinberg said
shrinking the staff base in France had not been a matter of
discussion, and therefore not an issue with Viehbacher.
One lever Sanofi could pull would be to make further
acquisitions, according to Bernstein analyst Tim Anderson.
"Generally speaking, in the pharmaceutical sector, larger
M&A deals tend to happen when companies are in difficult straits
and this is where Sanofi seems to be at the moment," he said.
Sanofi has stayed somewhat on the sidelines of a global tide
of mergers and acquisitions in the industry over the past year.
Weinberg ruled out mega-deals, saying these rarely created
value, but said the group would keep looking at targeted
acquisitions to strengthen its existing businesses.
"It's not because we haven't acted lately on this front that
we won't do so tomorrow, but we are not interested in big
operations, in what we call mega-mergers," he said.
(1 US dollar = 0.7844 euro)
(Additional reporting by Ben Hirschler in London and Alexandre
Boksenbaum-Granier in Paris; Editing by James Regan, Andrew
Callus and Mark Potter)