11 September 2000 00:00 [Source: ICB Americas]Aventis plans to sell its animal nutrition business within a year, in what could be a prelude to splitting up its pharmaceutical and agricultural operations.
Earlier this year, the company revealed that it will divest its nutrition business, but it did not set a date. Aventis also said it would carry out a strategic review of its crop protection business.
A sale of the nutrition business could coincide with a decision to spin off the crop protection unit. The review will consider the stock market valuations of Syngenta, the merger of the agrochemicals and seeds interests of Novartis and Astra Zeneca, which is being spun off as a separate entity, and of Monsanto, for which its parent Pharmacia plans an initial public offering (IPO).
"A potential result of this review could be the separation of the pharmaceutical and agriculture activities," says an Aventis official. "The bringing of Syngenta and Monsanto to the financial markets will, for the first time, give an opportunity for the evaluation of crop protection businesses as entities distinct from life science conglomerates."
Aventis would then be able to compare the share value of its pharmaceutical business with those of crop protection units. "We can then determine whether the value of both businesses are reflected in our share price, or whether there is a need for value enhancement through another option," the official says.
Company executives admit that there are few synergies between Aventis's pharmaceutical and crop protection businesses. During the first half of the year, Aventis Pharma had gross margins of 66 percent and Aventis Agriculture had margins of 50 percent. However, the agriculture business had a higher sales margin on net earnings of 25 percent, versus 23 percent.
The animal nutrition business, which suffered a 1.5 percent drop in sales to á280 million ($249 million) during the first half, has been hurt by weak prices for bulk feed additives.
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