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Hoechst, Rhône confirm deal
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December 1, 1998: 6:12 a.m. ET
New drug and agrochemical unit to be called Aventis, 'eventual' full merger
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LONDON (CNNfn) - Germany's Hoechst and France's Rhône-Poulenc confirmed Tuesday they will merge their pharmaceuticals and agrochemicals businesses to create an industry leader with $20 billion in annual sales.
Hoechst (FHOE) said it marked the first step towards a full merger that would take place within 3 years. The companies first plan to sell their remaining chemicals units.
Germany's Schering (FSCH) will also take part in the joint venture, called Aventis. Schering has an agrochemical joint venture with Hoechst called Agrevo which will be folded into Aventis.
Aventis' 1997 pro forma operating earnings would be £$3.8 billion. The company will employ 95,000 people. It will be equally owned by the two parties, incorporated in France with its global headquarters in Strasbourg.
The two sides are expected to close the deal in mid-1999. Both Hoechst and Rhône will continue to be listed though they will be renamed Aventis Hoechst and Aventis Rhône-Poulenc.
Hoechst said its Hoechst Roussel Vet animal health division would not be included in Aventis. But Rhone's (PRPP) Merial joint venture with Merck (MRK) will be included.
Aventis hopes to save $1.2 billion over the next three years through synergies. Around 60% of the estimated savings will be in pharmaceuticals and around 40% in agriculture and other areas. Hoechst said there would be job cuts.
The long-reported deal was not received well by the stock market. Hoechst fell 2.6 marks to 70.20, Rhône lost 17.1 francs to 266.4 while Schering was down 5 marks at 205.
Hoechst chairman Jürgen Dormann is expected to be chairman of Aventis, while Rhône chairman Jean-René Fourtou will be vice-chairman. 
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Hoechst
Rhône-Poulenc
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