The Boards of Directors of Sanofi and Synthélabo plan to submit to their respective shareholders the merger of their companies into a new entity to be called Sanofi-Synthélabo, which would absorb the two parent companies Sanofi SA and Synthélabo.

Combining the complementary strengths of Sanofi and Synthélabo, Sanofi-Synthélabo will possess all of the capabilities necessary to ensure its expansion whilst improving its profitability, and thus become a major global pharmaceutical company.

Sanofi-Synthélabo will have :

• Healthcare sales which are expected to reach FRF 35 billion in 1998 with excellent earnings growth prospects ;
• three blockbuster drugs - Stilnox® /Ambien® , Aprovel® /Avapro® and Plavix® - which will enhance existing market positions, particularly in the US ;
• a portfolio of established products and of compounds in development which is well-focused on a core group of four therapeutic areas : Cardiovascular / Thrombosis, Central Nervous System, Oncology and Internal Medicine ;
• an R&D organisation backed by state-of-the-art technologies such as genomics, combinatorial chemistry and high throughput screening, and a vast portfolio of compounds in development, including 50 programmes, nearly 30 of which are in Phases II and III of clinical investigation ; the combined R&D expenditure of the two companies should be around FRF 5.7 billion ;
• a leading position in the pharmaceutical industry in Europe and solid potential in the US market through the combined strengths of Sanofi’s sales force and the acquisition of Lorex Pharmaceuticals in 2002. In Japan, where both companies have already established considerable market presence for their respective products, the development of Sanofi-Synthélabo will be pursued through the long-standing, lasting relations maintained with major partners.

Sanofi’s business activities in the Beauty sector will be divested.

In addition to the combined earnings of Sanofi and Synthélabo, additional profits generated from the merger are expected to be obtained gradually during the next three years to reach FRF 1.3 billion after taxes in 2002.

The plan to join together the two companies takes place within a growth-orientated context. A strong common corporate culture will foster the development of vast existing complementary strengths and will open new opportunities for the men and women who adhere to the dynamic momentum thus created. The resulting adjustments will be dealt with all due regard for the shared social values of the two companies.

The legal structure of the merger will enable the new entity to be unburdened by goodwill. The accounting treatment of restructuring charges will ensure that there is no impact on consolidated earnings.

The merger transactions within the new entity, Sanofi-Synthélabo, will be proposed to shareholders on the basis of an exchange ratio of 13 Sanofi shares for 10 Synthélabo shares.

At the general meetings of shareholders, a proposal will be put forward to grant double voting rights for registered shares held by Sanofi and Synthélabo shareholders for more than two years.

Within this framework and taking into account the dilution effect on the capital of Sanofi resulting from the conversion into shares of the convertible bond issue of June 1995, Elf would have a 35.1% shareholding and approximately 45% of voting rights in Sanofi-Synthélabo and L’Oréal would have a 19.4% shareholding and approximately 25% of voting rights. Elf and L’Oréal intend to conclude a shareholders’ agreement for a minimal duration of 6 years.

The Board of Directors of Sanofi-Synthélabo would be composed of 12 members : 4 proposed by Elf, 3 proposed by L’Oréal and 3 independent directors and it would be proposed to the Board of Directors to appoint Messrs. Jean-François Dehecq Chairman and Chief Executive Officer and Hervé Guérin Vice-Chairman and Chief Operating Officer of Sanofi-Synthélabo. Messrs. Dehecq and Guérin have come to a mutual agreement regarding the composition of the Sanofi-Synthélabo management teams.

Sanofi-Synthélabo will be one of the leading French companies, quoted on the Paris Stock Exchange in terms of market capitalisation. The company’s head office will be located in Paris.

Merger agreements will be submitted to the approval of Sanofi and Synthélabo shareholders during the Extraordinary General Meetings of shareholders of the two companies to be held in May 1999. Employee representative bodies will be consulted on the matter.

The conclusion of this merger is submitted to the approval of the antitrust authorities.

Morgan Stanley is Sanofi’s financial advisor and Lehman Brothers is Synthélabo’s financial advisor for this transaction.

Disclaimer

Sanofi
Thierry Orsoni 01.53.77.41.08
Synthélabo
Bénédicte Bogh 01.45.37.57.47