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US legal action Aventis' latest weapon in repelling Sanofi

Published on 26/04/04 at 05:12pm

Aventis has unleashed its latest stratagem in resisting Sanofi-Synthleabo's hostile takeover bid, a US legal action claiming its rival has played down the risk to its biggest product, Plavix.

Sanofi faces a challenge to the patent on its blockbuster anti-platelet drug in the US this summer, and if the decision goes against the company, it stands to lose around $4 billion of annual revenue from 2005, making it or any merged company less attractive to investors.

Analysts are forecasting that Sanofi will in fact win the case, but Aventis is keen to undermine the company's E48 billion ($57 million) offer however it can, and says the lawsuit is intended to stop Sanofi communicating any further "misinformation and half-truths". Sanofi responded by dismissing the lawsuit, saying it was "without merit" and was an attempt to let the courts rather than shareholders decide the final outcome.

As Pharmafocus went to press, the ruling of the European Commission on the bid was expected imminently, but sources close to the decision indicated that the merger would be cleared, Sanofi having already arranged for the necessary product divestments. The companies will have to wait until 5 May before the US competition regulator announces its ruling - a timing which analysts believe Sanofi could exploit to increase the value of its offer.

Meanwhile, the French government has renewed its opposition to a 'white knight' offer from Novartis for Aventis, putting up a major obstacle to any action from the Swiss company.

A senior French minister said it would be "impossible" for France to remain neutral in the negotiations for Aventis. He added that an Aventis/Novartis merger was "not the likeliest" outcome to Aventis' attempts to avoid a hostile takeover from Sanofi.

Outright intervention in the proceedings could bring France into conflict with the European Commission, which can review any government blocking of takeovers on any grounds other than pubic order or national security.

"Legally we might be neutral, but there are political concerns relating to health and national security that require public authorities to be able to act," the minister said.

French health minister Philippe Douste-Blazy reiterated the stance, telling Le Journal du Dimanche: "We defend French industry. When we have the chance to be able to create one of the world's biggest pharmaceutical groups in our country we have to take it."

Aventis chief executive Igor Landau continues to lobby ministers to allow the Novartis tie-up, which would create a company that would rank number two in the world and number four in the US, with a focus on cardiovascular, oncology, vaccines and metabolism therapeutic areas.

Novartis said it had conducted a feasibility study that showed there was a viable business case for its combination with Aventis. After a merger, Novartis plans for non-core products from both companies to be spun-off into a newly created company, while the main business would handle more promising brands.

The proposal was devised with one eye on appeasing concerns in France and Germany about redundancies, but some job losses will result whichever company wins out.

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