Aventis Unlikely to Attract U.S. Suitor

GlaxoSmithKline: This company wouldn't solve its research pipeline by acquiring Aventis, whose pipeline "is less robust than many industry peers." Acquiring Aventis would cause dilution for Glaxo shareholders -- more so than for other white knights.

Pfizer: The drug giant is still digesting its 2003 purchase of Pharmacia. Another megadeal "could cause organizational and cultural strain."

Johnson & Johnson: On the plus side, J&J and Aventis would have complementary products in treatments for cancer, diabetes and infections, and even though cost savings would come "in the early years" of a merger. But on the minus side, Arnold worries that the weakness of the dollar versus the euro limits the potential cash component of any transaction which could affect shareholder support.

Other U.S. rivals: Arnold said the dollar's weakness vs. the euro and the possibility of French government resistance are crucial reasons to discount other U.S. suitors. In addition, Bristol-Myers Squibb is still trying to climb out of a slump of several years; Procter & Gamble would have to make a significant shift in its corporate strategy to swallow an international drug company; and Abbott might have to divest certain anti-infective drugs to secure approval from government regulators.

Arnold rates Aventis as market perform; she gives Sanofi-Synthelabo an outperform rating. She doesn't own shares, and her firm doesn't have any investment banking relationship with any of the companies cited in this story.

American depositary receipts of both companies trade on the New York Stock Exchange. When the deal was announced, Aventis' U.S. shares rose only $2.10 to $75.10. But the stock had been creeping up steadily from $64.76 on Jan. 12. In midafternoon Friday trading, the shares were at $78.45.

Sanofi dropped to $34.30 on Jan. 26, the day the deal was announced, from the $37.01 closing price for the previous trading day. In midafternoon trading Friday, the shares were at $36.70.

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