Aventis’s ‘poison pill’ raises market concerns

Sanofi’s e50bn (£33.64bn) takeover of Aventis has provoked debate among the companies’ legal advisers about the importance of France’s first ‘poison pill’.

The so-called ‘poison pill’ centres on the ‘Plavix warrants’, a product that would reimburse Aventis’s shareholders in the event of Sanofi being unsuccessful in pending US patent litigation over its cancer drug Plavix. Aventis’s advisers are convinced that the warrants were crucial in Sanofi’s decision to raise the price.

“It was clearly a poison pill and we’ve never seen that in the French context,” said a Sanofi lawyer. “We were always confident that the Plavix warrants would not fly.”

Crucially, on the Friday before the weekend completion of the deal, France’s regulatory authority the Authorites des Marches Financiers (AMF) backed Sanofi’s viewpoint that the warrants broke French takeover regulations. This was a position that lawyers for Aventis were prepared to challenge in court until a revised price was agreed.

“I think it’s one of the main reasons that the price went up,” insisted one of Aventis’s advisers. “The interesting thing in this warrant is that we departed from the US poison pill in order to adapt it to a product that is more a risk protection warrant.”

A Sanofi lawyer disagreed. “It was essentially financial at the end of the day,” he said. “We raised our offer and there was pressure on both sides from the French government to get the deal done. On the legal side, we were confident in our position.”

Sanofi instructed Thierry Vassogne of Linklaters in France and David Katz of Wachtell Lipton Rosen & Katz in the US for the first time because regular adviser Cleary Gottlieb Steen & Hamilton was conflicted. Jean-Michel Darrois and Olivier Diaz of Darrois Villey Maillot & Brochier and Jean-Pierre Martel of Rambaud Martel
completed the Sanofi team.

Sullivan & Cromwell and Bredin Prat were the innovators behind Aventis’s warrants. One lawyer said: “I’m totally convinced that this is a product that will be used again.”

Corporate partners Gérard Mazet (France) and Richard Pollack (US) led the Sullivan & Cromwell team, working with Jean-Francois Prat of Bredin Prat.