Hoechst & Rhone-Poulenc Merge To Create Aventis

After weeks of speculation, Hoechst AG and Rhone-Poulenc have announcedthat they are to merge their life sciences businesses into a new company called Aventis. The new entity will initially comprise the pharmaceutical and agricultural activities of both groups and represents the first phase of a two-step plan which will eventually lead to a full merger of the two European giants. This is expected to occur within the next two to three years, once they divest their non-life sciences assets.

Aventis will have its global headquarters in Strasbourg, France, and will have a combined turnover of approximately $20 billion. The companies say that with a combined R&D budget of nearly $3 billion, Aventis "will have one of the most competitive innovation capabilities in the industry," and one of the leading sales and marketing forces in the world.

Combining the life sciences assets of R-P and Hoechst is expected to provide "additional operational efficiency" with synergies of more than $1.2 billion over the next three years, with 60% of the estimated savings coming from pharmaceuticals, including personnel cuts.