Implications of Total's decision to sell Sanofi-Aventis stake

The French petroleum major Total is to ease out of its capital stake in Sanofi-Aventis but not before the final outcome of the contested case over the patent on the firm's blockbuster blood thinning drug Plavix (clopidogrel; Marketletters passim). Christophe de Margerie, the new director general of Total, told the firm's annual general meeting that the company intended to sell its 13.1% stake in the short term. The statement pushed Sanofi-Aventis' share price down 0.5% on the Paris Bourse on May 11.

Mr de Margerie added that the disengagement would be gradual. No action is to be taken until the Plavix patent case is settled because it involves at least 10% of the French drugmaker's profits and generated $5.8 billion in global sales last year. A favorable court judgement could be expected to boost the share price and enable Total to achieve a higher sale price for the shares.

Meanwhile, the other shareholder of reference in Sanofi-Aventis, the cosmetics major group L'Oreal, has said it has no intention of disengaging by selling its 10.5% holding at present, with its president, Lindsay Owen-Jones, saying the group regards its stake, worth some 9.7 billion euros ($13.13 billion), as a financial reserve that it could use to make an important acquisition, according to French press sources.