Novartis and AstraZeneca to merge

2 December 1999

Novartis and AstraZeneca to merge

FWi staff

LIFE science giants Novartis of Switzerland and AstraZeneca of the UK are to merge their agribusiness sectors.

The deal, announced this morning by Novartis, will create the worlds largest agrochemicals business.

The boards of both companies unanimously agreed to spin off and merge Novartis Crop Protection and Seed business and Zeneca Agrochemicals.

The new company will be called Syngenta AG, and is to be based in Basel in Switzerland. Bringing combined sales of US$7.9 billion in 1998, Syngenta will be ranked number one in all major regions and have a presence in 100 countries.

Heinz Imhof, current head of Novartis Agribusiness, will be chairman of Syngenta, and Michael Pragnell – presently chief executive officer of Zeneca Agrochemicals – will hold the same title in the new company.

The two companies will continue running separately until regulatory and shareholder approval has been received. It is anticipated this will be cleared by the second half of 2000.

Novartis shareholders will receive 61% of shares in Syngenta and AstraZeneca shareholders 39%.

Novartis Animal Health business and AstraZenecas 50% holding in Advanta are not included in the transaction.

Mr Imhof said: “The creation of Syngenta marks the most exciting milestone in the history of both businesses.

“The combination will allow us to create a leading high-performance company with an excellent competitive position, providing a base for a sustainable increase in shareholder value.”

This deal is likely to have wider ramifications for the agrochemical industry, setting off a chain reaction with other companies seeking to consolidate their positions through mergers.

It will also bring AstraZenecas strobilurin fungicide, azoxystrobin, and the new Novartis strobilurin, trifloxystrobin, under the same roof.

However, Andy Pigott, Novartis head of marketing services, said it was too early to say if this would affect marketing strategies for the products.

AstraZeneca has been making plans to dispose of its agrochemical division since deciding earlier this year it was no longer part of its core operation.

In October it announced the loss of 450 of 8500 jobs across the operation.

In the same month, Novartis announced cuts of SFr100m in its agrichemical division despite, sales holding.

It will now concentrate on its more profitable healthcare businesses.

Last month Novartis was reported to be lining up a bid for US life sciences giant Monsanto.

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