Cablegate: Sanofi-Aventis Takeover Battle Ignites Political

This record is a partial extract of the original cable. The full text of the original cable is not available.

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.

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