Bristol-Myers European and U.S. shares jump on speculation of Sanofi-Aventis buyout

Bristol-Myers Squibb Co. shares rose in European and U.S. trading Monday, after a media report said the U.S. company could be bought by French drug maker Sanofi-Aventis SA.

A pre-merger memorandum was signed last week and the deal could be finalized by September, weekly La Lettre de l'Expansion reported Monday, citing unnamed sources.

Sanofi-Aventis and Bristol-Myers declined to comment. There has been speculation about a merger because the two companies jointly market blood thinner Plavix and blood pressure medicine Avapro/Avalide.

In Frankfurt trading, shares of Bristol-Myers Squibb jumped 7.5 percent to close at 21.66 ($27.99). On the New York Stock Exchange, Bristol shares soared $1.22, or 4.65 percent, to $27.43.

Shares of Sanofi-Aventis slipped 1.4 percent to finish at 69 euros ($89.16) in Paris. The company's U.S. traded shares lost 77 cents to $44.57 on the NYSE.

Analysts have speculated whether Bristol-Myers would be a takeover candidate since it is currently lacking a permanent CEO and recently has introduced several promising drugs, with more in the pipeline. However, analysts said no offer would be made until the Plavix patent litigation, which began last week, had been decided. Plavix is Bristol-Myers' best-selling drug.

The trial is expected to last several weeks but it is unclear when the judge would rule.

Last August, generic drug manufacturer Apotex Inc. began selling a cheaper version of Plavix after an agreement to settle a patent dispute fell apart. A judge issued an injunction forcing Apotex to stop selling the generic drug but it wasn't required to recall what was already in the market. The debacle forced former Bristol-Myers CEO Peter Dolan from his job and board member James Cornelius is now the company's interim head.

In a report, Prudential analyst Timothy Anderson said Sanofi-Aventis would make the most logical suitor for Bristol-Myers because of their long-standing collaborations. He said that over the next few years Sanofi-Aventis' earnings will slow while Bristol-Myers are forecast to expand.

However, he said the problem with the deal is that both companies have substantial amounts of products losing patent protection between 2010 and 2012, which means each will lose 30 percent of total revenue in that timeframe.

Overall, analysts are skeptical about mergers between large drug makers. Pfizer Inc. bought Pharmacia Corp. several years ago, and it had done little to help the company's performance. Last week, Pfizer announced its second major cost-cutting plan in two years as the company continues to struggle with flat sales and a lackluster pipeline.