Swiss chemical giant Novartis announced Thursday that it and its British-Swedish competitor AstraZeneca were spinning off their agricultural operations and merging them to create a world leading agrochemical firm.This content was published on December 2, 1999 - 09:35
Swiss chemical giant Novartis announced Thursday that it and its British-Swedish competitor AstraZeneca were spinning off their agricultural operations and merging them to create a world leading agrochemical firm.
Some 3,000 jobs worldwide will be cut in the deal, a Novartis statement said – an announcement that prompted immediate protests from a trade union spokesman in Switzerland.
The new firm is to be called Syngenta, with combined sales of $7.9 billion based on 1998 results. Based in Basel, it will be the world's No. 1 firm in crop protection and No. 3 in seeds.
AstraZeneca and Novartis said a merger was seen as the best possible option, because it would allow them to cut duplicate administrative, marketing and manufacturing costs.
Novartis spokesman Mark Hill said it was still unclear at this stage how many jobs would be cut in Switzerland. He said lay-offs would be implemented in a "socially responsible way" and with "appropriate compensation."
A regional trade union spokesman said unions feared that 12 percent of jobs might be slashed in the merger process. He demanded that the new company accept the collective work contracts and stop shedding any more jobs.
Swiss unions have been shocked by announcements of jobs cuts in recent weeks. Rail technology group ADtranz and shoemaker Bally both said they were restructuring their operations -- a move that will cause the loss of a total of 960 jobs.
Analysts have been forecasting mergers in the $30 billion-a-year agrochemical industry, with prices slumping and controversy growing over the use of genetically modified seeds.
Heinz Imhof, currently head of Novartis Agribusiness, will become chairman of Syngenta. Michael Pragnell, presently chief executive officer of Zeneca Agrochemicals, will be chief executive officer.
Subject to approvals from Novartis and AstraZeneca shareholders and regulatory agencies, the companies expect to complete the merger and spin-off in the second half of 2000.
Novartis will own 61 percent and AstraZeneca 39 percent.
The deal is subject to approvals from Novartis and AstraZeneca shareholders and receipt of regulatory clearances. The companies expect to complete the merger and spin-off in the second half of 2000.
Syngenta management expects that the merger will create pretax savings over three years of around $525 million annually, Novartis said.
Shares of both companies rose Wednesday.
From staff and wire reports.
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