05 March 2004 11:25 [Source: ICIS news]
LONDON (CNI)--Franco-German firm Aventis detailed Friday the five headline reasons for its rejection of Sanofi-Synthelabo’s takeover offer following French stock market regulator AMF’s issuance of a file number for the rebuttal document.
In finally issuing a detailed strike-back at Sanofi weeks after its immediate rejection of the French pharmaceuticals group's offer, Aventis called the hostile bid “opportunistic” with major downside risk. It added that the offer undervalued the group, presented limited strategic benefit for Aventis, and threatened significant job cuts – especially in France and Germany.
Aventis’ management board repeated its advice to shareholders to hold onto their stock while it “explore more value-creating alternatives”. Further details on this aspect of the group’s strategy, however, were not disclosed.
Aventis chairman Igor Landau said in a statement: “The tender period [for the Sanofi offer] will not close until the end of May at the earliest and Aventis shareholders should hold on to their shares as there is greater value ahead.”
On Monday, Aventis said it had received a hearing date at the Paris appeals court of 6 May for its bid to have AMF’s clearance of the Sanofi offer overturned.
In its rebuttal document, Aventis first headline point was that Sanofi – which is only half its size – had acted opportunistically to disadvantage its shareholders. It said Sanofi had deliberately moved early, prior to Aventis issuing its financial results and targets for 2004-07, and also sprang its bid before knowing the outcome of its patent defence of key revenue earner, the heart drug Plavix.
Aventis’ second headline point said Sanofi’s offer failed to recognise its growth potential, that the French group should pay a premium because it was seeking control of the combined group, and nor did the offer reflect that the Franco-German major would contribute the majority of earnings to the merged entity.
In addition, having only been offered a 23.4% discount to the average multiple in the pharmaceuticals sector, Aventis shareholders would only have 39% of the voting rights in the combined group.
Aventis’ third headline point repeated its claim that Sanofi’s stock and cash offer – 81% and 19%, respectively - held significant downside risk on the paper element. The risk is heightened over the uncertainty regarding the outcome of Sanofi’s patent defence of Plavix, Aventis added.
It also noted that the patents of two of Sanofi’s other key revenue earning drugs – insomonia treatment Ambien and cancer therapy Eloxatin – are due to expire in vital markets over the next two to three years.
The Franco-German group also noted that key shareholders in Sanofi plan to sell up by the end of this year.
The valuation of the initially priced takeover offer of approximately Euro47bn ($58m) has fluctuated in recent weeks along with Sanofi’s share price.
Furthermore, Aventis said the sales and earnings of the combined entity would be affected by disposals likely to be required for anti-trust approvals. It added that the synergistic savings pegged at Euro1bn by 2006 were “highly uncertain”. Organisationally and culturally, Aventis said integrating the companies could prove difficult.
In its fourth headline point, Aventis said the Sanofi offer presents it with only limited strategic benefits in terms of critical mass, geographic presence, research and development (R&D) or product portfolio.
Aventis’ final headline point stresses that any cost synergies from a takeover would demand major job losses, primarily in France and Germany, from the combined group’s some 102 000 employees. However, the firm’s spokesman was unable to offer any further comment before the full document is released, which is expected later today.
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