The Aventis-Sanofi Merger: Role of French Government?
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Case Code: BSTR116 Case Length: 17 Pages Period: 1998-2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Aventis SA and Sanofi SA Industry: Pharmaceutical Countries: France Themes: Mergers Acquisition and Takeovers |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Acquisition Bid
While Sanofi's CEO Jean-Francois Dehecq (Dehecq) felt that the proposed merger would lead to significant benefits for the combined entity, it was strongly opposed by Aventis' CEO Igor Landau (Landau). Asking Aventis shareholders to reject the bid, Landau alleged that Sanofi's move was a hostile attempt to acquire Aventis. Aventis management board led by Landau strongly opposed Sanofi's offer (See Box I) and recommended its supervisory board to reject the offer. The offer was soon rejected citing reasons that it was of a hostile nature and did not take into consideration the significant patent risks associated with Sanofi's main products. The board further added that Sanofi's offer was at a premium of just 3.6% of the prevailing share price of Aventis, and was not in the best interests of the company's shareholders. Dehecq, however, disagreed with Aventis. In a press release issued by Sanofi, he stated "The combination of Sanofi-Synthelabo and Aventis will create long-term value for all shareholders and will be successful thanks to the dedication of both groups' employees towards a shared future..."....
The Takeover Battle
On February 03, 2004, The French financial markets authority, Autorité des marchés financiers (AMF) approved Sanofi's unsolicited tender offer to acquire equity stake in Aventis, pursuant to French tender offer rules. However, Aventis appealed against this decision. The Supervisory Board of Aventis, on February 17, 2004, unanimously decided that Sanofi's offer was not in the interest of the company, its shareholders and employees. The board stated that the offer was financially inadequate and also involved certain important social risks like loss of job for Aventis employees, particularly in France and Germany, with limited benefits for Aventis. It asked Aventis shareholders not to tender their shares to Sanofi. On March 05, 2004, On behalf of the Aventis management board, on March 05, 2004, Landau in a press release stated, "On January 26, 2004, Sanofi submitted an unsolicited offer to the Paris Bourse authority, to take control of Aventis without any consultation between the two companies...
Enters French Government
In a significant turnaround of events, on April 26, 2004, the Aventis Supervisory Board agreed on an improved acquisition bid by Sanofi. The revised offer valued Aventis at €54.5 bn, raising its initial hostile bid which valued Aventis at €47.8 bn. Aventis shareholders were now offered five shares of Sanofi and €120 in cash for every six Aventis shares they held (See Box III for the revised offer). Landau in a press statement issued by Aventis said, "We are pleased to have reached an agreement that recognizes the value of Aventis from a financial standpoint as well as the talent and expertise of our employees. By being equally represented in the management of Sanofi-Aventis, this agreement provides the necessary conditions for the success and development of the new group."This sudden acceptance of the improved offer made by Sanofi, after a three-month long bitter takeover battle, surprised the media and industry experts. Analysts were quick to point out the proactive role of the French government in getting the Aventis-Sanofi deal through. They said that the preference for an all-French deal by the government was instrumental in changing Aventis earlier plans to merge with Novartis...
Exhibits
Exhibit I: Aventis Stock Price Chart
Exhibit II: Sanofi-Synthelabo Stock Price Chart
Exhibit III: Aventis Group - Consolidated Statement of Operation
Exhibit IV: Sanofi-Synthelabo - Consolidated Statement of Income
Exhibit V: Novartis-Aventis Merger - The Perfect Marriage?
Exhibit VI: French Takeover Regulations
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