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French pharmaceuticals group Sanofi-Aventis is discussing a possible merger with Bristol-Myers Squibb, say people familiar with the talks.
“Nothing has yet been settled, but the two companies have agreed to jointly study whether a deal would be worthwhile,” said one of several finance industry executives who confirmed the talks to Les Echos, the FT’s French sister newspaper.
A merger would create a group of similar size to Pfizer, the world leader. Sanofi-Aventis, the world’s fourth-biggest pharmaceuticals group with a market capitalisation of €93.8bn ($121bn, £61.8bn), is more than twice the size of BMS.
Analysts said the Paris-based group might have to pay around €50bn to secure control, a premium of 20-25 per cent on Monday’s price.
Shares in BMS rose 4.7 per cent in New York on Monday while shares in Sanofi fell 1.4 per cent in Paris.
A merger has long been discussed and the two companies have been close since 1989, when they began jointly marketing Plavix, an anti-coagulant.
By taking over BMS, Jean-François Dehecq, the Sanofi chairman, could complete his career-long ambition of making it the world leader.
BMS has a number of drugs for cancer, viruses and the central nervous system under development, but recently agreed to a joint development and marketing deal for two new diabetes drugs with AstraZeneca of the UK.
The deal could be complicated by legal action in the US where BMS has been under investigation by the justice department since last summer over an agreement sought with Apotex, a generic manufacturer.
Additional reporting by Andrew Jack in London
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