Novartis Considering Aventis Merger; Is a "White Knight" Bid Imminent?
This article was originally published in The Pink Sheet Daily
Executive Summary
The French market regulator Autorite des Marches Financiers has asked Novartis to explore a transaction. The company signaled its intention in January to jump back into the merger fray.
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Novartis is exploring the possibility of launching a "white knight" bid for Aventis against Sanofi-Synthelabo's $60 bil. merger proposal. "Responding to a request by [Autorite des Marches Financiers], the French market authority, Novartis AG confirms they are exploring the feasibility of a combination with Aventis," the company said March 12. "No decision has been taken yet whether or not to pursue such a transaction." AMF asked Novartis on March 11 to publicly disclose whether it was exploring the feasibility of a merger with Aventis. Rumors that Novartis was interested in a deal were causing volatility of Aventis shares on the French stock market. While a Novartis/Aventis combination has been the subject of increasing speculation since Sanofi launched its hostile bid Jan. 26, the statement is Novartis' first public confirmation that it would be interested in an Aventis merger. The deal would be a strategic fit, especially in the areas of oncology (Novartis' Gleevec and Zometa ; Aventis' Taxotere and Genasense ) and cardiovascular disease (Novartis' Lotrel , Lescol and Diovan ; Aventis' Lovenox and Delix ). After a relatively quiet three-year period, Novartis CEO Daniel Vasella signaled his intention to resume a search for a merger candidate in January. Until now, Novartis has set its sights on Roche, but the company has repeatedly spurned Novartis' advances. While refusing to offer specifics, Vasella said Novartis would consider the "product portfolio, the pipeline, the area of activities, and the geographic fit" of a potential merger partner. Novartis last sought a merger deal in the late 1990s in an effort to boost its presence in the U.S. The company initiated a bid for Monsanto/Searle, but was rejected; Pharmacia subsequently acquired Searle and then merged into Pfizer. Novartis' consideration of an Aventis merger follows declarations by other large pharmaceutical companies - including GlaxoSmithKline and Pfizer - that they are not interested in pursuing mega-deals. - Kate Rawson |