Drug giants in France square off over offer

Aventis spurns hostile bid from Sanofi-Synthelabo


PARIS - Sanofi-Synthelabo, the French pharmaceutical company, made a $60 billion hostile bid yesterday for its national rival, Aventis, setting off a fierce takeover battle as Aventis rejected the offer.

Aventis, prodded by the French government to reach a friendly agreement, had been plotting its defense all weekend in anticipation of the offer and immediately rejected the bid as too low. Aventis also raised the prospect that it could seek a "white knight" by arguing that "there are other scenarios with a stronger industrial and social rationale."

The takeover by Sanofi, if successful, would create the world's third-largest drug company, behind Pfizer Inc. and GlaxoSmithKline PLC, and the new company would become France's new corporate standard bearer. Aventis makes the allergy drug Allegra and the anti-clotting drug Lovenox, while Sanofi-Synthelabo makes the stroke-prevention drug Plavix and the sleeping pill Ambien.

The government's encouragement of the takeover bid is unusual because if Sanofi succeeds, the merger would be bound to result in an enormous number of layoffs. Sanofi, which would not specify the number of job losses, said the deal would result in annual savings of 1.6 billion euros, or $2 billion.

"We couldn't pass up the idea of building a European champion," said Sanofi's chief executive, Jean-Francois Dehecq. "We are convinced that the offer is attractive and that we can convince Aventis."

France's finance minister, Francis Mer, said a merger between Sanofi-Synthelabo and Aventis would be "rather positive." In an interview with the French radio station Europe 1, he said Sunday that some of the most successful mergers had been created by the "grouping together of strengths between a certain number of players who share the same values, the same culture."

The hostile offer shows that Anglo-American values are seeping into the corporate culture of France, where takeovers were once negotiated quietly and in a refined manner.

Sanofi offered five of its shares and 69 euros in cash for every six shares of Aventis. The deal values each Aventis share at 59.63 euros

The bid represents a premium of 3.6 percent over Aventis' Friday close of 57.55 euros, when it was up 1.7 percent after The New York Times reported that Sanofi was preparing an offer.

Shares of Aventis have risen nearly 14 percent in the past two weeks as speculation about a merger mounted. Sanofi contends that the bid represents about a 15 percent premium based on Aventis' stock price before speculation emerged about a bid.

Consumers are not likely to notice many changes as a result of a merger, except perhaps that the combined companies would have more money for advertising.

Even physicians would have a hard time noticing any change since the combined companies would probably retain nearly all of their sales staff.

A merger with Aventis would give Sanofi-Synthelabo a powerful marketing presence in the United States, where the industry makes most of its profits because drug prices there are so much higher than in the rest of the world.

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