Aventis Unlikely to Attract U.S. Suitor

A flurry of colorful comments and rumors of white knights punctuated the news surrounding Aventis(AVE) this week as the company continued its attack on the Jan. 26 unsolicited bid by Sanofi-Synthelabo(SNY). But after all the comments and speculation have subsided, the deal will probably remain an affair between the two giant European drugmakers.

"Come on Sanofi -- Time to Sweeten the Bid," said the headline of a Thursday research report by Tim Anderson of Prudential Equity Group. "As much as management may resist, the likelihood of a merger ultimately rests with Aventis' shareholders, and we continue to feel that a sweetened bid by Sanofi-Synthelabo will get the deal closed."

Anderson has a neutral-weight rating on Aventis, but doesn't follow Sanofi-Synthelabo. (He doesn't own shares in either company, nor does his firm have investment banking relationships with either company.)

Sanofi-Synthelabo offered a mixture of stock and cash for its larger rival. The deal was initially valued at about 47.8 billion euro, or approximately $60 billion.

Aventis had sales of 14.7 billion euro for the 12 months ended Sept. 30, 2003, making it the world's seventh-largest drug company, according to IMS Health. Sanofi-Synthelabo, which ranks 15th, had sales of 6.9 billion euro. Aventis also had more than triple its competitor's revenue in the U.S. -- 6.2 billion euro vs. 1.8 billion euro.

Anderson added that Aventis "actually built a (mostly) believable case" for it being worth more than its competitor's bid, which, he said, was only 4% above Aventis' share price on Jan. 23, the last trading day before the bid was announced. The bid was 15% above the average share price of Aventis during the month before the hostile offer was made.

Another supporter of Strasbourg-based Aventis eventually agreeing to a marriage with Paris-based Sanofi-Synthelabo is Catherine J. Arnold of Bernstein Research.