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Aventis rejects $60-billion offer

Sanofi-Synthelabo, the French pharmaceutical company, made a $60-billion hostile bid Monday for its national rival Aventis, setting off a fierce takeover battle as Aventis rejected the offer.

Aventis, prodded by the French government to reach a friendly agreement, had been plotting its defense all weekend in anticipation of the offer and immediately rejected the bid as too low. Aventis also raised the prospect that it could seek a "white knight" by arguing that "there are other scenarios with a stronger industrial and social rationale."

The takeover by Sanofi, if successful, would create the world's third-largest drug company, behind Pfizer and GlaxoSmithKline. Aventis makes the allergy drug Allegra and the anticlotting drug Lovenox; Sanofi-Synthelabo makes the stroke-prevention drug Plavix and the sleeping pill Ambien.

The government's encouragement of the takeover bid is unusual because if Sanofi succeeds, the merger would be bound to result in an enormous number of layoffs. Sanofi, which would not specify the number of job losses, said the deal would result in annual savings of 1.6-billion euros, or $2-billion.

"We couldn't pass up the idea of building a European champion," said Sanofi's chief executive, Jean-Francois Dehecq. "We are convinced that the offer is attractive and that we can convince Aventis."

France's finance minister, Francis Mer, said a merger between Sanofi-Synthelabo and Aventis would be "rather positive." In an interview with the French radio station Europe 1, he said on Sunday that some of the most successful mergers had been created by the "grouping together of strengths between a certain number of players who share the same values, the same culture."

The hostile offer shows that Anglo-American values are seeping into the corporate culture of France, where takeovers were once negotiated quietly and in a refined manner.

Sanofi offered five of its shares and 69 euros in cash for every six shares of Aventis. The deal values each Aventis share at 59.63 euros.

The bid represents a premium of 3.6 percent over Aventis' Friday close of 57.55 euros, when it was up 1.7 percent after the New York Times reported that Sanofi was preparing an offer.

Shares of Aventis have risen nearly 14 percent in the past two weeks as speculation about a merger mounted. Sanofi contends that the bid represents about a 15 percent premium based on Aventis' stock price before speculation emerged about a bid.

Consumers are not likely to notice many changes as a result of a merger, except perhaps that the combined companies would have more money for advertising.

A merger with Aventis would give Sanofi-Synthelabo a powerful marketing presence in the United States, where the industry makes most of its profits because drug prices there are so much higher than in the rest of the world.

Sanofi-Synthelabo will need such marketing muscle to develop the drugs it is shepherding through clinical trials.

A merged giant would very likely be forced to sell Arixtra, an anticlotting drug from Sanofi-Synthelabo that competes directly with Aventis' more successful medicine, Lovenox. And it would also most likely sell Camptosar, Aventis' cancer drug that competes with Sanofi-Synthelabo's more successful and newer drug, Eloxatin.