Aventis prepares to 'squelch' Sanofi

27th January 2004, Comments 0 comments

PARIS, Jan 27 (AFP) - The French-German pharmaceutical group Aventis prepared a counter-attack Tuesday against a hostile takeover bid by rival Sanofi-Synthelabo, predicting that a merger could mean the loss of 10,000-12,000 jobs worldwide.

PARIS, Jan 27 (AFP) - The French-German pharmaceutical group Aventis prepared a counter-attack Tuesday against a hostile takeover bid by rival Sanofi-Synthelabo, predicting that a merger could mean the loss of 10,000-12,000 jobs worldwide.

"Aventis is determined not only to refuse the price offered but to squelch the operation," a source close to the matter told AFP.

Analysts said the group had three options: dissuade shareholders from backing the transaction, locate a third company to raise the stakes or launch a counter-bid.

An association of current and former Aventis employees holding shares in the company, whose control amounts to four percent of the capital, rejected the bid Tuesday, dismissing it as "hostile and stingy."

Aventis is also predicting that 10,000 and 12,000 jobs could be lost if Sanofi-Synthelabo succeeds in the takeover, a source close to Aventis said Tuesday.

"The EUR 1.6 billion in synergies envisaged by Sanofi-Synthelabo would come close to this figure, or 10 percent of the workforces of the two groups," he told AFP.

An Aventis spokesman declined to comment while a union source at the group said the figure of 10,000-12,000 could not be confirmed.

The warning nonetheless echoed fears voiced Monday by French trade unions after Sanofi launched a hostile stock-and-cash offer for Aventis that valued the group at about
EUR 47.8 billion (USD 60.1 billion).

But the bid has the blessing of the French government, which sees it as a formidable challenge to US and Asian competitors in the field of pharmaceutical research. If successful the takeover would create the world's third largest pharmaceutical group after Pfizer of the United States and GlaxoSmithKline of Britain.

In Germany Tuesday, Roland Koch, the regional head of government in the state of Hesse, called on the federal government to intervene with the French government to halt the Sanofi move on Aventis, which employs 9,000 people in his state.

Koch said the takeover was "obviously a coordinated project (with) the French government," echoing suspicions that the French want to acquire a large part of Germany's biotechnology skills.

A leading figure in the opposition Christian Democratic Union (CDU), Koch fears that a takeover would lead to more job losses in a country where unemployment is already chronic.

Aventis's supervisory board was meanwhile planning to meet Wednesday to consider its eventual response to the Sanofi bid, sources close to the group said. Aventis directors Monday categorically rejected the Sanofi overture as inadequate.

Sanofi meanwhile unleashed a vast advertising campaign aimed at wooing Aventis shareholders. The group purchased two full-page ads in several newspapers depicting an ill child and carrying the caption: "We reject the idea that we cannot quickly find a treatment that will cure Louis."

"Our tie-up with Aventis will help research to take a major step forward, putting new medicines and innovative products at the disposal of patients more quickly," the ad said.

Stock market analysts meanwhile said Aventis could concentrate its resistance on shareholders, citing what it says is the weakness of the premium on offer, the threat to jobs and possible risks posed by some of Sanofi's products, notably its anti-thrombosis treatment Plavix, the patent for which could become the subject of a lawsuit in the United States.

Another option would be to find a third company prepared to make a better offer than Sanofi, with GlaxoSmithKline and Bristol Myers Squibb of the United States mentioned as possible candidates for such a role.

A third tactic would be a counter-bid, with Aventis launching its own hostile move on Sanofi.

But such an approach would likely run into stiff opposition from Sanofi's two principal shareholders, the cosmetics group L'Oreal and oil giant Total, both of whom have backed the bid for Aventis.

On the Paris stock market Tuesday shares in both groups gained ground, with analysts suggesting that Sanofi might be inclined to sweeten the deal.

© AFP

                                            Subject: France news

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