Aventis Deal Changes Field in Europe

By choice or by coincidence, three European drug giants will issue their first-quarter earnings reports Thursday, giving investors a chance to see what years -- or even decades -- of mergers and acquisitions have done for their share prices and growth prospects.

All of the companies are products of multiple, mega-mergers. On Wall Street, the verdict on their performance is mixed, as U.S. analysts evaluate the immediate past of stock price performance and the immediate future of recommendations for buying, holding or selling shares.

And in the latest twist, one of the companies, Strasbourg, France-based Aventis (AVE) earlier this week reluctantly agreed to a hostile takeover from rival French drugmaker. Sanofi-Synthelabo,which would create the world's third largest drugmaker.

Aventis had hoped to do a friendly deal with Swiss drug giant Novartis, which happens to be the product of the 1996 merger of Ciba-Geigy and Sandoz. Aventis, itself, is the 1999 creation of a cross-border marriage between France's Rhone-Poulenc and Germany's Hoechst, both of which acquired several other drug companies over the years.

No U.S. drugmake expressed an interest in Aventis.

Nevertheless, the takeover soap opera has been good for Aventis' investors. Like other large foreign companies, Aventis' American Depositary Receipts trade on the New York Stock Exchange. For the 12-month period ended April 22, Aventis' ADRs are up 69% compared to the 25% gain of the S&P 500 and the 8.6% gain by the Amex Pharmaceutical Index of 15 large U.S. companies. Aventis' shares started rising significantly in mid-November, when takeover speculation began.

Novartis' shares rose 9.7% during this period while Sanofi-Synthelabo's shares had gained 13.9%.

Two other multinational drug giants reporting first quarter earnings on Thursday also have been manufactured by big mergers.

There's AstraZeneca , the result of the 1999 fusion of Sweden's Astral and Britain's Zeneca Group.

And there's GlaxoSmithKline, which has gone through so many changes that a printout from the company's website contains more than four pages of corporate history with names such as Smith, Kline & French, Beecham, Burroughs Wellcome and, of course, Glaxo, which was the name of a dried milk product before it became the name of a company.