Aventis Unlikely to Attract U.S. Suitor

A flurry of colorful comments and rumors of white knights punctuated the news surrounding Aventis(AVE Quote) this week as the company continued its attack on the Jan. 26 unsolicited bid by Sanofi-Synthelabo(SNY Quote). 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.