Sanofi in hostile bid for Aventis

French drugs firm Sanofi-Synthelabo SA launched a Euro 47.8bn (US$60.66bn) hostile bid for larger rival Aventis, in a move to create the world's third largest pharmaceuticals group.

However, the offer was rejected by Aventis, which said it undervalued the company. Sanofi's bid lifted shares in both firms as investors welcomed the idea of cutting costs, combining sales forces and pooling drug pipelines.

If completed, the deal would create a French national pharmaceutical champion valued at more than US$100bn, ranking third in the global league table behind Pfizer and GlaxoSmithKline

But industry analysts said Sanofi's bid could prove just the first step in a drawn-out takeover battle. 'This is a warning shot across the bows. This is not necessarily the final offer,' said Marc Booty, pharmaceuticals analyst with Commerzbank in London.

Sanofi chairman and ceo Jean-Francois Dehecq said he hoped to convince Aventis of the merits of the offer in the coming weeks and months.

France's second-largest drugmaker is offering five of its shares for six Aventis shares plus Euro 69 in cash. It said 81% of the offer was in shares and 19% in cash.

Sanofi is also offering all-share and all-cash alternatives, although the total cash element of any offer will still be limited to 19%. The options are 35 of its shares for 34 Aventis shares, or Euro 60.43 per share in cash.

Sanofi has secured a Euro 12bn credit facility from its advisory banks, which will be used to finance the cash part of the offer and refinance Aventis' debt. It said it would pay out a maximum of Euro 9.2bn in cash

Source: Reuters