Home News Sanofi feels Novartis pressure in bid for Aventis

Sanofi feels Novartis pressure in bid for Aventis

Published on 22/03/2004

PARIS, March 22 (AFP) - The French pharmaceutical group Sanofi-Synthelabo faced increased pressure Monday in its bid to acquire French-German rival Aventis as Swiss giant Novartis was said to be preparing a more attractive counter-offer.

Spurring speculation was a report in the French specialist newsletter La lettre de l’Expansion which said Novartis was preparing a bid for Aventis that valued its shares at a 15 percent premium over the current price.

The British weekly newspaper The Business reported Sunday that Novartis was considering a bid that valued Aventis at EUR 58.5 billion (USD 72 billion), well above the 48-billion-euro hostile offer from Sanofi-Synthelabo.

Under such circumstances, Sanofi would find it hard to make a better offer, L’Expansion said.

The French daily Le Figaro, citing sources close to the matter, said Novartis was preparing a bid for Aventis that would involve creating two separate companies — one of which would be spun off.

The first company would retain major therapeutic drugs with strong growth potential, while the one to be listed on the stock markets would control more established but less innovative treatments.

“If Novartis launches a bid everything will start from scratch and that would not be a good thing for Sanofi,” acknowledged a source close to the matter.

For Sanofi to increase its original offer, a possibility allowed for by chairman Jean-Francois Dehecq on February 11, it would have to obtain approval from two principle shareholders, the oil company Total and the cosmetics group L’Oreal, the source added.

“Starting at a certain price they will think it is not worth the trouble,” the source commented.

Aventis shares were close to a two-year high on Monday, gaining 1.26 percent to EUR 64.35 in midday trades in a market that was 1.8 percent lower overall.

“A merger of Novartis and Aventis would create a powerhouse in the areas of oncology, cardiovascular, and diabetes,” Prudential Securities analysts said.

Zuercher Kantonalbank said: “A split in two separate entities is a realistic scenario… certainly positive for the company’s valuation.”

Sanofi launched its cash and share offer on January 26, offering five of its own shares and EUR 69 for six Aventis shares in a swap that covered 81 percent of the outstanding Aventis stock.

The remaining 19 percent was covered in an offer of EUR 60.43 in cash for each Aventis share.

Aventis has pointedly spurned the offer as too low and expressed its preference for a solution that included Novartis.

“It is clear that a group resulting from such a merger would be of a higher quality than one emerging from a tie-up with Sanofi,” supervisory board vice president Jean-Rene Fourtou said in a weekend interview published by the Swiss newspaper Finanz und Wirtschaft.

An Aventis spokesman said: “We are studying all scenarios that offer more value than Sanofi.”

Any decision must wait until after the second round of French regional elections on Sunday, sources close the matter forecast.

Especially since “Novartis must take the (French) government’s opinion into account,” one noted.

Prime Minister Jean-Pierre Raffarin weighed into the debate last Tuesday, implicitly urging the two French groups to reach agreement in the name of a “national interest” that would leave Novartis out.

“Construction of a great European pharmaceutical group securely anchored, and deeply marked by French-German relations is strategic for France,” Raffarin said.

His intervention was quickly slammed however by the French employers federation however, and by minority shareholders in Aventis who expressed surprise at interference in “strictly private affairs”.


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