Sanofi Makes a Bid for Aventis
Drug maker Sanofi-Synthelabo ended weeks of speculation about a friendly merger with Aventis by launching a hostile $60.2-billion takeover bid Monday for its larger rival.
Outlining the offer that would create a new No. 3 drug maker, with annual revenue of $31.5 billion, Sanofi, the maker of the sleeping pill Ambien, talked down Aventis’ track record in growth and profitability.
“Aventis is not growing very fast, it has to be said,” Sanofi Chairman and Chief Executive Jean-Francois Dehecq said.
Hours later, Aventis, the maker of allergy medicine Allegra, hit back in a statement highlighting legal challenges to key Sanofi patents and warning shareholders not to be taken for a ride.
The takeover bid offered no benefit to Aventis shareholders, Chairman Igor Landau and his senior executives said, and would furthermore “make them shoulder the significant risks to Sanofi-Synthelabo’s main products.”
Strasbourg, France-based Aventis reportedly has hired three investment banks to advise it on how best to fend off Paris-based Sanofi’s approach, and is not ruling out a “white knight” deal with another investor.
Companies cited as possible white knights for Aventis include U.S.-based Bristol-Myers Squibb Co. and Schering Plough Corp., as well as s GlaxoSmithKline of Britain and Novartis of Switzerland.
“There are other possibilities with a stronger industrial logic,” Aventis said.
At stake in the struggle between France’s two largest drug makers is the creation of what would be the third-largest pharmaceutical company in the world, behind New York-based Pfizer Inc. and GlaxoSmithKline.
Analysts say the tie-up would be an excellent marriage, bringing together Sanofi brands such as Ambien and the anti-stroke drug Plavix with Aventis’ Allegra and blood-thinning medicine Lovenox.
As well as generating savings estimated by Sanofi at $2 billion a year, it would help reduce financial risk by plugging potential gaps in the companies’ drug development pipelines. That’s no small factor in a business where each new product takes an average of $1 billion and up to 15 years to bring to market -- and many don’t make it that far.
Product overlap between the two companies would be minimal.
Aventis said Sanofi’s offer -- five Sanofi shares and $87 in cash for every six Aventis shares, valuing Aventis stock at $71.63 -- undervalued the company.
The offer is a premium of 15.2% above Aventis’ average share price over the last month but only 3.6% over Friday’s close.
In New York Stock Exchange trading, Aventis shares rose $2.10 to $75.10 and Sanofi dropped $2.71 to $34.30.
