Aventis (France)


Until 2004, Aventis was France's foremost pharmaceutical company, formed in 1999 from the effective acquisition by Rhone-Poulenc of its German counterpart Hoechst. Originally conceived as a "life sciences" specialist, focusing on pharmaceuticals and agricultural chemicals, the merged group narrowed its focus further in the wake of the outcry over genetically modified products. It was targeted by smaller French rival Sanofi-Synthelabo in a hostile takeover bid launched in early 2004. Despite attempts by Aventis to recruit Novartis of Switzerland as a white knight, the French government put its tacit support behind Sanofi, and the two companies merged at the end of 2004 to form Sanofi-Aventis, later shortened to just Sanofi.

The foundations of Aventis were laid in Paris in the mid-19th century, when Etienne Poulenc acquired a small herbalist and apothecary. By 1900, the business had expanded considerably, making a variety of synthetic drugs. In 1928, Poulenc merged with Societe Chemique des Usines du Rhone, a dyemaker which had expanded into perfumes and other chemicals. After World War II, the company continued to grow, buying up a string of other French chemicals and pharmaceutical businesses. By the 1970s, Rhone-Poulenc was one of the country's biggest industrial powers, and Europe's third-biggest chemicals manufacturer.

During that decade, fierce competition from other chemicals companies, compounded by poor management decisions, pushed the group into huge losses. In 1982, the business was nationalised by France's recently appointed socialist government, and new management began the process of returning the company to profit. Following the election of a Gaullist government in 1986, the business was marked for privatisation, and Jean-Rene Fourtou was appointed as chairman, the first management consultant ever to take control of a major French business. However the floatation was postponed as a result of world stock market collapses a year later, and in 1988, the Socialists were re-elected to power.

With privatisation now delayed until 1993, Fourtou took the opportunity to launch a radical overhaul of the business, selling off numerous under-performing businesses, and acquiring assets designed to increase the company's exposure to the all-important US market. He paid $575m for Union Carbide's agrochemicals business in North America, and also acquired most of Stauffer Chemicals and Connaught Laboratories of Canada. In 1990, the French government transferred to Rhone-Poulenc its 35% shareholding in Roussel-Uclaf, a French-based pharmaceuticals company controlled by German drug company Hoechst. The same year Fourtou paid $1bn for an initial 51% of Rorer, maker of Maalox, the leading US antacid, to form Rhone-Poulenc Rorer; he also negotiated a joint venture with Merck to add a paediatric arm to the group's existing vaccines operation. By the time it was finally privatised in 1993, Rhone-Poulenc's value had risen to over FF34bn, more than 12 times the sum paid when the government acquired it 11 years earlier.

Now widely acclaimed as one of France's most skilled industrialists, Fourtou continued his deal-making, paying $2.9bn for British chemicals company Fisons, a business which generated more than $1bn a year from asthma drugs in addition to its collection of herbicides and other agricultural chemicals. He also increased the group's stake in its US subsidiary Rhone-Poulenc Rorer to 68%. As sales in this division soared following the introduction of new products Lovenox and Taxotere, Fourtou began a further restructuring of the group's business, shifting away from chemicals and towards pharmaceuticals. In 1997, the group formally announced its new direction, and began a new series of disposals, dropping textiles and chemicals businesses to focus on drugs. That year, Rhone-Poulenc merged its animal health business with that of Merck to form Merial; a year later it sold its Fisons chemicals business. 

But the key deal was the announcement in 1998 of a mammoth merger with larger German counterpart Hoechst, already Rhone-Poulenc's partner in Roussel Uclaf. Also originally founded in the mid-19th century, Hoechst had become part of the mighty German chemicals conglomerate IG Farben during the 1930s alongside Bayer and other companies, before being spun out as an independent business again in 1951. Over the next 40 years the group began to specialise as a chemicals manufacturer although it also acquired a string of pharmaceutical operations, including control of Roussel Uclaf, and US-based Marion Merrell Dow, later renamed Hoechst Marion Roussel. However as a result of declining profits from the chemicals sector, the business began transforming itself during the 1990s in a similar fashion to Rhone-Poulenc. 

Combining even such similarly motivated businesses as Rhone-Poulenc and Hoechst made for unusually complex negotiations. Conceived as a merger of equals despite the fact that Hoechst had substantially larger chemicals interests, the two companies agreed first to merge their pharmaceuticals and agrichemicals businesses, before selling off their various other chemicals operations over a three-year period. However this deal was unexpectedly rejected by Hoechst's biggest shareholder, Kuwait Petroleum, who demanded the benefits from the chemicals divestment sooner rather than later. Both boards were forced back to the drawing-board, finally emerging with improved terms for Hoechst shareholders in 1999. These included the early sale of its controlling stake in chemicals company Clariant, and a spin-off to shareholders of Hoechst's remaining chemicals business as Celanese. Following acceptance of this new deal, Rhone-Poulenc and Hoechst completed their merger at the end of 1999 and adopted the name Aventis.

Initial plans to hang onto the group's merged agricultural sciences division were revised when the public outcry over genetically modified foods reached a peak in 2001. The group was badly damaged by negative publicity when GM corn produced by US subsidiary StarLink, and not approved for human consumption, found its way into taco shells made by Kraft Foods. As a result, to distance itself from this increasingly controversial subsidiary, Aventis agreed to sell off its Aventis CropScience division to Bayer for around E7.3bn. The deal closed in June 2002. Aventis Animal Nutrition was sold to investment group CVS Capital Partners. (It was later sold on to Chinese chemicals group Bluestar, and now trades as Adisseo). Industrial gas subsidiary Messer Griesheim was also sold in 2001. In 2002, Jean-Rene Fourtou, who had masterminded Rhone-Poulenc's transformation resigned in order to take charge of the rescue operation at collapsed media giant Vivendi Universal.

The group continued to divest its non-core businesses in the early 2000s to focus on pharmaceuticals. At the end of 2003, the group agreed to sell Aventis Behring, the world's leading plasma protein company, to CSL of Australia for $925m. It also sold stakes in semi-conductors manufacturer Wacker, Swiss pharma company Clariant and all but 15% of its shares in French chemicals group Rhodia. At the beginning of 2004, smaller French pharmaceutical company Sanofi-Synthelabo, whose shareholders were L'Oreal and oil giant Total, launched an unexpected hostile takeover bid for Aventis. The initial offer valued Aventis at E47.8bn, but the company argued strongly against the deal, opening separate talks with Swiss-based Novartis as a possible "white knight" rescuer. That route was quickly blocked when the French government let it be known that it would do "everything in its power" to prevent ownership of Aventis shifting outside France. Novartis decided to put that threat to the test by preparing its own deal, but the move encouraged Sanofi to sweeten its offer. The Aventis board eventually accepted Sanofi's improved offer of E55bn in April. The entire Aventis management board, headed by Igor Landau, was dismissed in August, and was replaced by the Sanofi management team.  The deal was completed by the end of 2004.

Last full revision 12th July 2016


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