US embassy cable - 04FRANKFURT737

UNCLAS FRANKFURT 000737 
 
SIPDIS 
 
STATE PASS TO ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE 
DEPARTMENT FOR EUR/AGS, EUR/ERA, AND EB/TPP/ATT/ATP 
STATE PASS USTR 
TREASURY FOR OAISA SOBEL HARLOW CARNES 
HHS FOR FDA 
USDOC FOR COMMERCIAL SERVICE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, PGOV, GM 
SUBJECT: Sanofi-Aventis Takeover Battle Ignites Political 
Dispute over Jobs 
 
 
1. Sanofi-Synthelabo's bid to take over French-German 
pharmaceutical company Aventis has sparked resistance in 
Germany, particularly over French government remarks 
suggesting that Germany will absorb all the job losses. 
 
2. The Sanofi-Synthelabo bid is facing fierce resistance in 
Hesse, location of Aventis' German headquarters and its 
largest production facility.  (NOTE: Aventis dates from the 
1999 merger of Rhone-Poulenc and Hoechst, the world's 
biggest pharmaceutical company until the 1990's;  it employs 
9000 people in Germany, of which 7800 in the Frankfurt area 
-- END NOTE).  At the center of controversy are the French 
government's apparent support for the Sanofi bid and remarks 
Monday by French Social minister Francois Fillon that jobs 
in France are not at stake (implying that Aventis' 
operations in Germany are at risk).  The takeover would 
create the world's third largest pharmaceutical company. 
 
3. Hesse Minister-President Roland Koch (CDU/Christian 
Democrats) sharply criticized the French government's role 
in Sanofi's takeover plans ("this is not how partners treat 
each other") and said Sanofi intends to transfer "a great 
deal" of Germany's biotech competence to France and with it 
thousands of jobs.  Hesse SPD caucus chief leader Juergen 
Walter criticized the bid as the product of an "aggressive 
French industrial policy that goes far over the top." 
German chemicals union IG-BCE warned of a catastrophe for 
German biotech if Sanofi succeeds.  Aventis opposes the 
Sanofi bid and is looking for an alternative partner. 
 
4.  The German government is reportedly engaged on the issue 
at the national level.  According to media reports, 
Economics/Labor Minister Wolfgang Clement (SPD) is  in talks 
with the French government and with various companies. 
 
5.  COMMENT. The issues involved in the Sanofi-Aventis 
takeover battle -- and resistance to the French government's 
apparent role -- are politically salient in Germany.  The 
Hesse State Chancellery believes that political support for 
Aventis in Germany will prevent the takeover.  The Frankfurt 
Economic Promotion Board points to the one billion euros 
Aventis has invested in Frankfurt over the last five years 
(including the world's largest production site for inhalable 
insulin).  The Aventis works council in Frankfurt says the 
Sanofi-Synthelabo bid is a desperate move to save Sanofi 
itself being taken over and points out that Sanofi would 
likely dissolve the Hoechst holding company (making the 
merged company exclusively French).  Sources in the Hesse 
Economics Ministry say Aventis probably cannot ward off 
takeover unless it can find another partner.