Aventis accepts Sanofi takeover bid

Franco-German pharmaceutical company Aventis has accepted an improved Euro 53.7bn ($63.8bn) takeover bid from Sanofi-Synthelabo in a move creating the world's third largest drug company, provisionally named Sanofi-Aventis.

The decision by the company's board is keenly supported the French government, which was pushing to forge a national pharmaceuticals champion to rival GSK and Pfizer. French prime minister Jean-Pierre Raffarin welcomed the deal, which was clinched after Sanofi improved its original stock-and-cash offer, made in January, by around 14%.

'The choice of a merger between Sanofi and Aventis will allow the preservation of decision centers and jobs in France and Europe, and is in line with a strategic interest,' Raffarin said in a statement.

The only other suggested bidder Swiss giant Novartis never made a formal bid submission to the Aventis board and said it would not pursue its interest.

The Swiss firm said it had decided not to bid following Aventis's decision to engage in discussions with Sanofi 'at the strong intervention of the French government.'

'For domestic politics this is a win for (finance) minister (Nicolas) Sarkozy but if you look at the signal it sends the markets and foreign investment I think it is not a win,' said a Novartis official.

Sanofi's offer for Aventis was seen as a defensive move in the face of possible interest from bigger players, such as Pfizer or Britain's GlaxoSmithKline.

UK analysts are suggesting that if the deal collapsed, GSK may well have bid for Sanofi to try and reverse competition problems from generics, which are eroding GSK's market share. The group is also at the end of a £1.8bn cost-saving programme. With the merger likely to proceed, analysts expect GSK to buy some Sanofi-Aventis drugs anyway.

Any such merger could put pressure on Astra Zeneca, which some analysts believe could be a target for GSK, creating a UK-based pharmaceutical giant.