Aventis expected to fall to Sanofi takeover

28th July 2004, Comments 0 comments

PARIS, July 28 (AFP) - French-German pharmaceutical group Aventis is expected to fall to a controversial takeover bid worth EUR 55 billion (USD 66 million) by its smaller French rival Sanofi-Synthelabo when the outcome of the offer, closing late on Friday, is announced in two weeks' time.

PARIS, July 28 (AFP) - French-German pharmaceutical group Aventis is expected to fall to a controversial takeover bid worth EUR 55 billion (USD 66 million) by its smaller French rival Sanofi-Synthelabo when the outcome of the offer, closing late on Friday, is announced in two weeks' time.

Analysts questioned here Wednesday predicted that Sanofi would end up with at least 50 percent of Aventis shares plus one.

"Overall I think it's a done deal," commented one expert. "I would bet on more than 70 percent."

Meanwhile Aventis reported that net profit in the second quarter fell by 0.3 percent, blaming in part the cost of fighting the bid which it put at EUR 76 million in the second quarter and EUR 109 million in the first half.

The outcome of the offer will be published August 12. If Sanofi manages to obtain more than two thirds of Aventis capital, it could re-open the offer for 15 days in hopes of winning a 95 percent stake and ultimately taking full control.

Sanofi's bid for Aventis - unveiled last January 26 - was heavily backed by the French government, a position authorities vigorously defended on grounds of national interest in the face undisguised irritation on the part of Germany.

French political heavyweights such as Finance Minister Nicolas Sarkozy and Prime Minister Jean-Pierre Raffarin made no secret of their enthusiasm for the transaction.

Sarkozy in late April said the planned tie-up was "good news for workers and for French industry" and insisted that the government had acted correctly in urging the two groups to talk to each other.

"Our concept of what constitutes political action and the national interest is that a government does not have to sit with its arms folded under the pretext that it is faced by a market economy," he said.

"The government has the right to hold convictions and to act with conviction." Raffarin said France had made "a strategic decision" in favour of the health sector, as it had decades ago in the nuclear energy and aeronautical industries.

"France is not interventionist for its own sake, but wants to take part in a European dynamic," he added.

Such remarks irked German officials, who had called for neutrality on the part of the French and German governments in Sanofi's takeover bid, which was rejected as too low by the Aventis supervisory council on January 28.

Sanofi increased its offer by 14 percent to 55 billion euros on April 24 and won approval from Aventis' supervisory council the next day.

Five days later German Economy and Labour Minister Wolfgang Clement attacked the French government for its role in the takeover, telling the Financial Times it amounted to a "relapse into statist, interventionist policies."

Another disgruntled party was the Swiss drugs manufacturer Novartis, which dropped out of the bidding for Aventis after hinting strongly it had been turned away by the attitude of the French government.

The takeover would create the world's third largest pharmaceutical group. But to acquire its larger rival, Sanofi will have to take on a debt of about EUR 16 billion from creditor banks.

At the same time the deal is awaiting final approval from US competition authorities, which seems assured, as well as a decision from Aventis' principal shareholder, the Kuwait Petroleum Corporation.

KPC, with a 13.5-percent stake, has yet to make its position publicly known. It could sell its shares in Aventis for several billion euros, exchange them for a stake in Sanofi or hold on to them without participating in the offer.

KPC's representative on the Aventis supervisory council abstained during a vote on the takeover last April. No one from KPC furthermore has been listed as a future Sanofi-Aventis board member.

As recently as July 21 Sanofi officials were saying officially that they had had no contact with the Kuwaiti conglomerate.

© AFP

Subject: French news

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