Hoechst said in a brief statement that it was not yet sure if the talks would lead to a successful merger of the business. "No guarantee can be made over the outcome of the negotiations," Hoechst said.

Sources close to the negotiations told Reuters that the talks were likely to conclude by the beginning of December, however.

Speculation that the two are in negotiations have circulated in the markets for weeks and have driven shares in both groups sharply higher.

If successful, the marriage of the two groups would create the second-biggest drug maker in the world behind Merck & Co Inc of the United States.

Meanwhile, shares in German chemical group Hoechst AG were firm on Wednesday morning, rising slightly in reaction to confirmation from Hoechst that it was in talks with Rhone-Poulenc on a possiblemerger.

By 0902 GMT Hoechst shares were 1.04 marks higher at 79.40 marks. They opened trade at 78.20 marks and inched up to a day's high of 80.06 marks in the wake of the announcement.