Based in Strasbourg on the Franco-German border, the new group will be called Aventis and represents the first step to a full merger, the company said. Hoechst said it sees a full merger with Rhone within two to three years, once both have divested their remaining industrial chemical divisions.

Hoechst in Frankfurt also said its Hoechst Roussel Vet animal health division, which had sales last year of DM 901 million, would not be included in Aventis. Rhone's Merial joint venture with Merck & Co Inc of the United States will be included, however. Hoechst said it had been advised by Lazard on the deal and that Goldman Sachs and Rothschild counselled Rhone.

In India, the Rhone currently has two pharmaceutical entities, Rhone Poulenc India (essentially for prescription drugs) and RhonePoulenc Rorer (which handles the acquired Max range and institutional sales). Globally, the Rhone Poulenc group has only one publicly listed life sciences company, following the successful Rs 15,000 crore cash tender offer by Rhone Poulenc to buy out the outstanding 33 per cent shares in Rhone Poulenc Rorer.

Though a consolidation of the Rhone Poulenc's pharma operations is expected, the situation has been complicated by the fact that the French parent has a minority holding in Rhone Poulenc India. Rhone Poulenc Rorer India, on the other hand, is held 51 per cent by Rhone Poulenc Rorer France while 49 per cent is held by Rhone Poulenc India.

Although there are no major areas of overlap on the pharmaceuticals front, the key strengths of both companies lie in different but possibly complementary segments. While Hoechst's brand basket comprises anti-histamines, anti-diabetics, anti-infective and anti-rheumatics, Rhone-Poulenc's portfolio includes brands like Phensedyl (a cough syrup), Flagyl (anamoebicide), besides the Max India anti-cancer range.

``Rhone Poulenc's plans to introduce an anti-TB range would complement Hoechst's rifampicin-based Rifadin, Rifater, while Hoechst's Avil and Rhone Poulenc's Phenergan, both anti-histamines, will only boost the combine's presence in the anti-allergy segment,'' an analyst said. The combine will have a market share of 4.4 per cent.

Significantly, on the agrochemicals front, Hoechst Schering AgrEvo and Rhone Poulenc Agro already share a successful marketing relationship. Under the co-marketing deal, both partners are selling a fipronil-based rice insecticide under distinct brand names, Tempo and Regent.

Industry experts say that there are no major areas of overlap in terms of products and even if such a situation existed it could be taken care of by intelligent positioning. Major AgrEvo brands include Decis (essentially for cotton), Arelon (a wheat herbicide), Hostathion (for control of whitefly in cotton).

Meanwhile, the merger is expected to achieveglobal synergies of roughly $1.2 billion annually after three years and these are likely to be split approximately $700 million in pharma, $400 million in agro and $100 million in other functions.