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7-Misc: Some details on Hoechst-Rhone-Poulenc merger



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Hoechst brings forward timing of alliance
Financial Times (London)
March 17, 1999
By Uta Harnischfeger in Leverkusen

Hoechst, the German pharmaceuticals group, yesterday brought forward its 
planned merger with France's Rhone-Poulenc by two to three years, in an 
effort to secure the backing of Kuwait Petroleum Corporation, its largest 
shareholder. The planned merger would create Aventis, a life sciences 
company with $ 20bn in sales and 95,000 employees. The original plan 
foresaw a merger in two steps, with the first creating Aventis Hoechst 
and Aventis Rhone-Poulenc on July 1, after which both companies were to 
divest their remaining chemicals activities. The full merger was 
originally scheduled for late 2001 or 2002, but now it will be complete 
by the end of the year. KPC appeared divided over the merits of the deal. 
It wanted the new company created as soon as possible to boost 
shareholder value and, thus, the valuation of its stake.
But Jurgen Dormann, Hoechst chairman, stressed yesterday that KPC had 
assured Hoechst of its support following the revised timetable. "It is 
for a good reason that we are changing [the conditions of] the merger, 
after conducting all these talks with the Kuwaitis," said Mr Dormann, 
following a Hoechst supervisory board meeting. With a 24.5 per cent 
stake, KPC was in a position to prevent the merger, which requires the 
approval of 75 per cent of Hoechst shareholders. Mr Dormann and Igor 
Landau, managing director of Rhone-Poulenc, were keen to emphasise that 
many shareholders wanted Aventis created as soon as possible. Mr Landau 
said: "Like the other shareholders, the Kuwaitis support the creation of 
Aventis, but to see this company created only in two or three years posed 
a problem." The supervisory board will hold an extraordinary meeting at 
the end of April and shareholders will gather to vote on the merger in 
June or July. Investors seemed confused by the new timetable, with 
Hoechst shares ending the day down 2.1 per cent or euro 0.90 at euro 
41.50, while the overall market closed up 1 per cent.


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