Hoechst and R-P announce 50:50 life sciences merger

01 December 1998 10:04  [Source: ICIS news]

LONDON (CNI)--France’s Rhone-Poulenc (R-P) and Germany’s Hoechst announced Tuesday that they have agreed to merge their life sciences activities into a new, equally owned company called Aventis as the first step towards a full merger.

Aventis will comprise the pharmaceutical and agricultural businesses of both groups and will be incorporated in Strasbourg, France. It will be headed by Hoechst chairman Jurgen Dormann with R-P chairman Jean-Rene Fourtou as vice-chairman.

The agreement will also launch the procedure for the first phase of a two-step plan, which will lead within the next two to three years to a full merger of Hoechst and R-P after the divestments of their remaining non-life sciences assets.

With 1997 pro-forma sales of $20bn, pre-tax profits of $3.8bn and 95 000 employees, Aventis will be a global leader in life sciences holding top positions in both pharmaceuticals and agriculture, said Hoechst and R-P in a joint statement. It added that Aventis will have a combined R&D budget of almost $3bn, with around $2.5bn in the pharmaceuticals business.

By combining their life sciences assets, Hoechst and R-P said they expected to achieve operational efficiency synergies more than $1.2bn over the next three years. Around 60% of the estimated savings would be in pharmaceuticals and about 40% in agriculture and other areas. Part of these synergies will result in job reductions, said the two companies. However, it did not immediately quantify the likely number of redundancies.

The agreement creating Aventis is expected to be finalised in mid 1999, after completion of all legally required procedures and approvals. Hoechst and R-P will continue to be publicly listed after completion and will be renamed Aventis Hoechst and Aventis Rhone-Poulenc.

In a joint statement, Dormann and Fourtou said: "We want to create a new company, with European roots and global reach, to take full advantage of the extensive opportunities of life sciences in the 21^st century. With its new culture, increased R&D resources, competitive position in emerging technologies, enhanced pipeline and strong marketing muscle, Aventis will have a solid platform for sustained medium and long-term growth in both sales and profitability."

Hoechst and R-P said on a pro-forma 1997 basis, pharmaceuticals would have accounted for 72% of Aventis’ $20bn of sales, with agriculture the remaining 28%. Europe would have accounted for 42% of overall sales, the US 25%, Asia 14% and the rest of the world 19%.

Aventis will comprise two main businesses, Aventis Pharma and Aventis Agriculture. Aventis Pharma will encompass prescription pharmaceuticals (via Hoechst Marion Roussel and Rhone-Poulenc Rorer), vaccines (via Pasteur Merieux Connaught) and biologicals (via Centeon, which will be fully owned by Aventis and become an integral part of its core business). Aventis Pharma will also incorporate Hoechst’s 32.5% stake in the diagnostics company Dade Behring. Chairman of Aventis Pharma will be Igor Landau and Richard Markham will be chief executive.

Aventis Agriculture will encompass cropscience (including Hoechst Schering AgrEvo and Rhone-Poulenc Agro plus a yet to be finalised participation by Schering), animal nutrition (currently belonging to Rhone-Poulenc) and animal health (via Merial, the 50:50 joint venture between R-P and Merck). For the time being, it is expected that HR Vet will remain a subsidiary of Hoechst AG. Chairman of Aventis Agriculture will be Horst Waesche and Alain Godard will be chief executive.

By: Neil Sinclair
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly