The Swiss drug maker, Novartis, has officially joined the fight for the French-German Aventis group, which is battling a hostile bid from its French rival Sanofi-Synthélabo.This content was published on April 22, 2004 - 14:22
Novartis said on Thursday that it would begin merger talks with Aventis but added it was not sure it could cement a deal.
“We know how compelling the project is,” said Raymund Breu, chief financial officer at Novartis.
Although the Basel-based firm has downplayed its chances of clinching the deal, a partnership with Aventis would create the world’s second-largest pharmaceuticals group.
Breu said neither the price nor other aspects of a possible merger had been discussed with Aventis. He declined to give details of a timetable for the talks.
Aventis welcomed the move, which triggered a two per cent fall in the Novartis share price as investors worried that the company would be drawn into a messy cross-border merger battle.
The French government last month said it was opposed to a union between Aventis and Novartis, although it has appeared to soften its stance in recent weeks.
Patrick Devedjian, the French industry minister, said the government would remain neutral.
Support from rival
Franz Humer, the chairman of cross-town rival Roche, revealed unexpected support for the Novartis bid by warning the French government not to meddle in the industry.
Humer told London’s "Financial Times" that calls to preserve Aventis as a national drugs company - one of the reasons cited by the French government for its opposition - had no place in what is a global industry.
Breu said time would tell whether the Novartis bid was likely to be successful, adding that the company was confident it had "addressed all the concerns [of the French government]”.
Some analysts expressed surprise at the Novartis announcement, having already written off the deal as unlikely.
"I'm slightly surprised by the timing because it is far from clear to us that the second condition set by Novartis of French government neutrality has actually been achieved," said Marc Booty, an analyst at Commerzbank in London.
Many analysts said Novartis was in a stronger financial position than Sanofi.
Sanofi last week said it had reached a €453 million (SFr704 million) deal to sell two of its drugs to GlaxoSmithKline to fund the Aventis takeover.
Novartis made clear its desire to open talks with Aventis after announcing a 22 per cent rise in first-quarter net profit to $1.29 billion (SFr1.7 billion).
The company said the positive result was the result of a surge in sales to $4.31 billion at its drugs unit.
Overall sales were up 16 per cent to $6.64 billion, prompting Novartis to restate its hopes for a record year in 2004.
A merger with Aventis would substantially boost the Swiss company's share of the global market for cancer, diabetes and heart disease treatments.
Novartis is believed to be particularly keen on Aventis products such as the anti-thrombotic Lovenox, the hypertension drug Delix and the cancer treatment Taxotere.
swissinfo with agencies
Merger talks are to begin between Swiss-based Novartis and the French/German company, Aventis.
A possible deal would create the world's second-biggest drugs company behind the leading US firm, Pfizer.
The French government has opposed the merger, but said it would remain neutral.
Novartis reported a 22% increase in first-quarter profit to $1.3 billion (SFr1.7 billion).
Sanofi has offered €45 billion (SFr70 billion) for Aventis.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: email@example.com