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Aventis
Gets Hearing Date and States Its Case Against
Sanofi; Novartis Interested in Merger?
The Paris Court of Appeals will hear the case
against French stock market regulator AMF's
clearance of Sanofi-Synthelabo's hostile bid
for Aventis. A verdict is expected by the end
of May at the latest. If Aventis loses the
case, Sanofi can close on its offer eight days
after the ruling. If Aventis wins its appeal,
the Sanofi bid will be declared invalid.
Aventis has also issued a statement detailing
the reasons for its rejection of
Sanofi-Synthelabo's takeover bid. Aventis said
that Sanofi acted opportunistically in making
its bid before Aventis published its financial
results and before knowing the outcome of
Sanofi's patent defence (defense) of the heart
drug Plavix. Aventis also noted that Sanofi's
offer ignored the potential for growth that
Aventis possesses and failed to note that
Aventis' shareholders would only have 39
percent of the voting rights in the new
entity. Aventis also believes the offer holds
significant risks, especially in light of the
patent fight for Plavix and the fact that two
of Sanofi's key drugs will be off-patent in
two to three years. Sales and earnings of the
new company would also be impacted by
disposals most likely to be required for
anti-trust reasons. Aventis added that the
merger provides little strategic benefit to
Aventis in all respects, and also noted that
large job reductions, particularly in France
and Germany, would be required in order to
achieve any cost synergies.
Separately, Novartis has indicated that it is
considering a possible merger with Aventis,
but will only act if invited by the Aventis
Supervisory Board and if the French government
assumes a "neutral position". The
company has approximately $2.35 billion
earmarked for acquisitions. Aventis previously
said that it would consider a merger with a
company of similar or greater size, and
Novartis meets that criterion (Sanofi is half
the size of Aventis). Novartis currently holds
a 33.3 percent share in pharmaceuticals and
diagnostics group Roche. The French government
is opposed to the merger of Aventis with
Novartis, citing concerns over lost jobs and
the guaranteed access to vaccines in the event
of a bio-terrorist attack.
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