The board of Sanofi-Synthelabo SA, France's No. 2 drugmaker, approved making an unsolicited offer for Aventis SA, a person familiar with the meeting said. The combination would create the world's second-largest drugmaker.
Sanofi plans to make the stock and cash offer for Aventis later today after the board backed the plan in a meeting yesterday night at the company's Paris headquarters, the person said.
Strasbourg, France-based Aventis, with almost three times Sanofi's sales, is close to the same size in market value, at 46 billion euros (US$58 billion).
About 81 percent of the offer will be in shares with the remainder in cash, said the person, who declined to be identified. Sanofi plans to raise new shares to help finance the acquisition, the person said. The company is due to disclose details of the offer at 7:30am Paris time.
"If and when we receive the bid, the management board will review the offer, but until then, we can't make any comment," said Aventis spokesman Tony Roddam in a phone interview.
Aventis hired Morgan Stanley, Goldman Sachs Group Inc and Rothschild Group to fend off a possible takeover attempt by Sanofi, people familiar with the situation said yesterday.
Combining the companies would form the world's second-biggest drugmaker with 2002 drug revenue of about 24.9 billion euros, ahead of GlaxoSmithKline Plc and trailing only Pfizer Inc, according to a report by Natexis Bleichroeder.
Sanofi-Synthelabo is under pressure as its patent on the Plavix anti-clotting treatment is being challenged.
"This is a defensive move aimed at reinforcing product innovation," said Leonard Mazzoni, who helps manage a 40-million-euro health fund at Cyril Finance in Paris, in a televised interview. He spoke before the board meeting.
Sanofi spokeswoman Nicole Cranois declined to comment.
L'Oreal SA and Total SA, the company's biggest shareholders, also held board meetings over the weekend. L'Oreal spokesman Lorrain Kressmann declined to comment. Total spokeswoman Catherine Enck also declined to comment.
Shares of Strasbourg, France-based Aventis have risen 9.8 percent this month after the talks were reported in Handelsblatt and the New York Times. Shares of Paris-based Sanofi have fallen 3.3 percent in the same period.
A bid may help Sanofi chief executive Jean-Francois Dehecq, 64, keep his company from being taken over before he retires by 2008. Sanofi may become vulnerable to buyout bids last month when an agreement between L'Oreal and Total ends. Until then, L'Oreal, the world's largest cosmetics maker, and Total, the world's fourth-biggest oil and gas company, are each obliged to hold their stakes of 20 percent or more in Sanofi.
Patrick Langlois, the 59-year-old chief executive of Aventis, has said the two companies aren't in talks, and Le Monde said Friday that Langlois said "unsolicited mergers are very rare in the drug industry." The two drugmakers both make top-selling blood thinners.
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