French drugs firm Sanofi-Synthelabo SA launched a 47.8-billion-euro ($60.66 billion) hostile bid for larger rival Aventis SA on Monday in a move to create the world's third largest pharmaceuticals group.
The offer was rejected by Aventis, which said it undervalued the company.
Sanofi's bid follows weeks of merger speculation that lifted shares in both firms as investors welcomed the idea of cutting costs, combining sales forces and pooling drug pipelines.
If completed, the deal would create a French national pharmaceutical champion valued at more than $100 billion, ranking No 3 in the global league table behind Pfizer and GlaxoSmithKline.
But industry analysts said Sanofi's bid could prove just the first step in a drawn-out take-over battle.
"This is a warning shot across the bows. This is not necessarily the final offer," said Marc Booty, pharmaceuticals analyst with Commerzbank in London.
Sanofi Chairman and Chief Executive Jean-Francois Dehecq said he hoped to convince Aventis of the merits of the offer in the coming weeks and months.
France's second-largest drug-maker is offering five of its shares for six Aventis shares plus 69 euros in cash. It said 81 percent of the offer was in shares and 19 percent in cash.
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