Novartis Unlikely to Rescue Aventis from Hostile Bidder Sanofi-Synthelab SA

Strategic Insights -

Analysts have expressed skepticism over the likelihood of Novartis AG attempting to rescue Aventis SA from the hostile bid made by Sanofi-Synthelabo SA. Sanofi's €48.5 billion offer has sparked rumors of potential white-knight bids, but Novartis appears to be focused on a merger with Roche Holding AG. Novartis holds a 33.3% stake in Roche, and if it acquires more shares, Swiss law would require it to make an offer for all outstanding shares.

Key Takeaways:

  • Novartis has a 33.3% stake in Roche Holding AG and may pursue a merger despite initial rebuffs by the company.
  • Novartis may not find Aventis' products of interest, as Alexander Groschke, an analyst with Landesbank Rheinland-Pfalz, stated that Aventis has "practically no interesting products."
  • Aventis may work out a merger with Sanofi with the support of its major shareholders, Total SA (24.4% stake) and L'Oreal SA (19.5% stake).
  • Analyst Steve Plag of CSFB forecasts a 16% rise in earnings per share for Aventis in its full-year results, to €3.05.
  • Aventis shares have risen by 9.64% since the Sanofi bid was announced on January 26, capitalizing the group at €50.6 billion.
  • Oliver Schluter, an analyst with DZ Bank AG, expects Novartis to offer between €65 and €68 per Aventis share if it gets Aventis' blessing and avoids a bidding war.

Statistics:

  • Aventis' shares have risen by 3.61% to €63.10 on Friday, capitalizing the group at €50.6 billion.
  • Sanofi's shares have added 3.90% to €57.25, reducing their fall to just 0.87% for the first week of the bid.
  • Novartis has a 33.3% stake in Roche Holding AG.
  • Analyst Steve Plag forecasts a 16% rise in earnings per share for Aventis to €3.05.
  • Aventis' full-year sales jumped 19% to $24.9 billion, generating a 6% gain in profit to $5 billion.
  • Novartis' 2003 sales jumped 19% to $24.9 billion.

Sources:

  • Analysts cast cold water on the likelihood of Novartis AG trying to rescue Aventis SA from hostile bidder Sanofi-Synthelabo SA, by Andrew Bulkeley in Berlin and Ross Tiemann in Toulouse, France, The Wall Street Journal, January 30.
  • Landesbank Rheinland-Pfalz, Alexander Groschke, analyst, Mainz, Germany.
  • CSFB, Steve Plag, analyst, The Wall Street Journal, January 30.
  • DZ Bank AG, Oliver Schluter, analyst, Frankfurt, Germany.