French joy, German fears as Aventis buys Sanofi

26th April 2004, Comments 0 comments

PARIS, April 26 (AFP) - Sanofi-Synthelabo of France announced on Monday the forthcoming birth of the world's third-largest pharmaceuticals group with an increased bid for its French-German rival Aventis, in line with French government wishes but to the dismay of German unions.

PARIS, April 26 (AFP) - Sanofi-Synthelabo of France announced on Monday the forthcoming birth of the world's third-largest pharmaceuticals group with an increased bid for its French-German rival Aventis, in line with French government wishes but to the dismay of German unions.

French Prime Minister Jean-Pierre Raffarin said France had made "a strategic decision" in favour of the health sector, as it had done decades ago in the aeronautical industry and nuclear energy.

Anticipating charges that Sanofi increased its offer by 14-percent to EUR 54.5 billion (USD 64.31 billion dollars) under government pressure, Raffarin said "France is not interventionist for its own sake, but wants to take part in a European dynamic".

But in Brussels, a EU spokesman said "the European Commission can take action against member states for what they do but not for what they say.

"If the French government had taken steps to block" a counter-offer by Swiss pharmaceutical group Novartis, the Commission could have investigated to see whether there had been an illegal attempt to prevent the free movement of capital from outside the EU, the spokesman said.

But the French authorities had not done so, he said.However, on March 23 Novartis said its interest in a counter bid for Aventis would depend on France taking a "neutral" attitude, and the following day the French Le Figaro newspaper quoted an unnamed government source as saying that France had warned Novartis against getting involved.

In Berlin, the government urged Sanofi to safeguard jobs and research activities at Frankfurt, where most of the 9,000 Germans employed by Aventis work.

Spokesman Bela Anda said the government would watch the takeover very closely but remain neutral in the process.

But union leaders in Frankfurt expressed concern at what they said was a threat to German jobs and at the government's failure to act to prevent the takeover.

"The atmosphere is very bad, a mix of anger, sadness and disappointment," said Gertraud Lauber, a representative of the union IG BCE at the Aventis site.

"We won guarantees about jobs in 1998 when Hoechst and Rhone-Poulenc merged (to form Aventis), and these guarantees are going to disappear," he said.

Sanofi's chairman Jean-Francois Dehecq, who would head the new group known as Sanofi-Aventis, sought to allay German fears, saying the takeover would "create wealth for shareholders but is also in the interest of employees.

"He told a news conference that "Sanofi is a smaller firm than Aventis, and since we are growing quickly we need to find new resources."

Aventis chairman Igor Landau - who had fought Sanofi's initial hostile 47.8-billion-euro bid and encouraged Novartis - told the same news conference that he was "happy" to have reached an agreement which "recognises the value of Aventis".

Novartis announced that it was withdrawing from the field, a decision which boosted its shares by 4.18 percent to CHF 58.45 in morning trading on the Zurich stock exchange. When trading in shares in Sanofi and Aventis was resumed, Sanofi shares fell by 6.17 percent to EUR 52.50 and Aventis shares by 5.36 percent to EUR 62.70.

Novartis chief executive Daniel Vasella told the Paris evening paper Le Monde in an interview that the revised bid "is a victory for Aventis which could in the long run prove very costly for Sanofi.

"Sanofi said it would hold an extraordinary meeting of shareholders on May 24 to approve a share issue to pay for the takeover which is based on five Sanofi shares and EUR 120 for six shares in Aventis.

It later announced that it would also seek a credit line of EUR 16 billion. The new terms represent a value of EUR 68.93 per Aventis share, up from EUR 60.43 proposed initially on January 26.

The takeover would creat the third-biggest drugs group in the world after Pfizer, which is based in the United States, and GlaxoSmithKline in Britain.

Sanofi said its new bid had been approved unanimously by the boards of the two key shareholders in Sanofi, oil group Total and cosmetics company L'Oreal.

Aventis's largest shareholder, Kuwait Petroleum Corporation, which holds 13.5 percent of the French firm, refused to comment.

© AFP

                                                Subject: French news

 

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