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Drug dealing
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November 18, 1998: 6:31 a.m. ET
Hoechst merger report acts as catalyst for more pharmaceutical speculation
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LONDON (CNNfn) - Merger speculation in Europe among pharmaceutical stocks has spilled over from Rhone-Poulenc/Hoechst to include French groups Sanofi and Synthelabo.
However, analysts pooh-poohed talk of a deal between Sanofi, controlled by oil producer Elf Aquitaine, and Synthelabo, majority-owned by beauty products group L'Oreal.
"This is an old chestnut," said Morgan Stanley Dean Witter analyst Andrew Baum, "it's been triggered by the Hoechst/Rhone-Poulenc speculation."
"I don't see what's in this for Sanofi," said Janet Dyson at Merrill Lynch. Other analysts agreed a deal was unlikely, but said it could not be ruled out.
One analyst who did not want to be named said the management cultures at the two companies were "not compatible", adding that Synthelabo would not address the key issues for Sanofi of funding its development pipeline and finding a U.S. distributor.
The analyst suggested Sanofi would prefer a link-up with a major U.S. group, "such as DuPont (DD) or Forest Labs (FRX)."
Despite the market skepticism, shares in all four French groups rose in Paris. Synthelabo stock jumped 4 percent to 1,117 francs.
A combined Sanofi/Synthelabo would have a market value of about 155 billion francs ($27.7 billion).
The companies refused to comment.
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Synthelabo
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