10 December 2003 18:32 [Source: ICIS news]
PARIS (CNI)--French pharmaceuticals companies Aventis and Sanofi-Synthélabo could benefit significantly by merging at the end of 2004, Paris-based stockbrokers Exane told CNI on Wednesday.
Two main Sanofi-Synthelabo shareholders - L'Oréal and Total - will end their pact restricting their rights to dispose of their holdings in the pharmaceutical company. This agreement expires in December 2004, opening up Sanofi-Synthelabo to possible acquisition or merger.
Such a merger would create the world's second largest pharmaceuticals group with sales of $27.2bn (Euro22.2bn), said Exane. It sees the more dynamic Sanofi-Synthélabo as the more likely predator in a takeover bid, although the two companies have similar market capitalisations of around Euro40bn.
The brokerage firm sees 2004 as a critical period for the two companies, with both having to face up to licensing problems for their leading products, combined with development pipeline shortages. It said a merged Aventis-Synthelabo would have four late-stage drug candidates poised for launching in 2005, with two more for 2006 and six for 2007.
The firms' portfolios have few overlaps, and very little would have to be divested to satisfy the antitrust authorities - probably less than 3% of combined sales. Moreover, said Exane, the European Union (EU) would probably welcome another strong European pharmaceuticals group able to invest heavily in research and development (R&D) and marketing, both of which would be strengthened by a merger.
Exane sees social consequences as the main obstacle to a merger - especially in France where Aventis has 13 500 workers and Sanofi-Synthélabo has 12 500. This amounts to a quarter of the joint workforce, as well as 19 sites out of the 80 worldwide owned by the two companies. As a result, Exane has calculated that merger synergies could be lower than the sector's average of 8% of joint costs - perhaps as low as 5% or Euro900m.
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